IMF Managing Director and Deputy Managing Director Criticize US Fiscal Deficit
"US Has Room to Curb Spending and Raise Taxes"
Experts continue to warn about the astronomical national debt of the United States. Analysis suggests that the deepening fiscal deficits of advanced countries, including the U.S., will significantly hinder global economic growth.
Gita Gopinath, the IMF's First Deputy Managing Director, stated in an interview with major foreign media on the 8th (local time), "In the case of the U.S., there is sufficient capacity to reduce the fiscal deficit based on a solid economy," urging the U.S. to curb spending and increase taxes to reduce fiscal burdens.
She added, "Relying on borrowing to finance all expenditures is a temptation that countries should avoid," and assessed that "it is now time for (advanced countries) to invest in fiscal consolidation and discuss ways to bring debt burdens back to pre-COVID-19 pandemic levels."
As the U.S. federal government debt has surged astronomically, concerns have recently been raised both inside and outside Wall Street and the government. According to the U.S. Congressional Budget Office (CBO), the current U.S. public debt (excluding intragovernmental holdings) totals $27.4 trillion (approximately 37,300 trillion KRW), reaching 99% of the U.S. Gross Domestic Product (GDP). The CBO projects this ratio to soar to 116% in ten years, surpassing the historical peak during World War II (106%).
The IMF also pointed out in its 'Fiscal Monitor' report released in April that the U.S. fiscal deficit as a percentage of GDP is expected to reach 7.1% next year, more than three times the average of other advanced economies (2%). Furthermore, it forecasted that the deepening fiscal deficits of the U.S. and China would pose "significant risks" to the global economy. Earlier, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), stated that the U.S. government's approach of "spending 17% of revenues on debt repayment is unsustainable," and analyzed that trade restrictions by various countries could reduce global GDP by up to 7%.
Major foreign media noted, "Many see 2025 as a crisis year for the U.S. fiscal outlook," highlighting that "former President Donald Trump pledged to make the 2017 tax cuts permanent if re-elected, and concerns have been raised that President Joe Biden's inability to curb high levels of spending could lead to a larger fiscal deficit than expected."
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