Senior International Monetary Fund (IMF) official Gita Gopinath warned the United States about the increasing fiscal deficit amid growing national debt.
IMF Warning on US Fiscal Policy
Gita Gopinath, the IMF’s first deputy managing director, sent a statement to Washington urging for more sustainable fiscal policies to bring down the debt. She stated, "The US fiscal deficits are too large and they need to be brought down."
Debt Burden and Country's Credit Rating
Currently, the national debt of the US stands at $36.8 trillion, with a federal debt to GDP ratio reaching 122%. Moody's recent decision to downgrade the US credit rating has escalated concerns, citing increasing debt and political instability as key factors.
Uncertainty in US Trade Policy
Gopinath expressed concerns regarding the uncertainty in US trade policies, especially related to tariff changes. She noted that while the tariff pause with China is positive, underlying trade frictions could negatively impact economic growth.
IMF emphasizes the need for structural changes in US fiscal policy despite short-term measures to reduce the deficit and a desire to improve trade relations.
