IMF Warns Rising US Public Debt Threatens Economic Stability

(MENAFN) The International Monetary Fund (IMF) said Wednesday that while the US economy is expected to grow at a faster pace this year, rising public debt represents a “growing stability risk” for both the United States and the global economy, as stated by reports.

In its preliminary findings following the Article IV consultation, the IMF noted that US policymakers are pursuing a wide-ranging agenda to raise living standards and strengthen economic self-sufficiency. Measures include bolstering domestic manufacturing, reducing trade deficits and reliance on foreign goods, increasing energy production, lowering dependence on undocumented labor, and scaling back the federal government’s role in the economy.

The IMF said the US economy performed strongly in 2025, supported by solid productivity growth despite a government shutdown late last year. Tariffs raised goods inflation, but services inflation eased, and the labor market remained near full employment despite slower job growth.

Financial conditions stayed relatively loose, stock markets reached record highs, and the federal deficit narrowed slightly to 5.9% of GDP in fiscal 2025.

Growth is projected to increase from 2.2% last year to 2.4% in 2026. Inflationary pressures from tariffs are expected to diminish, and unemployment is forecast to remain near 4% in 2026–2027.

However, the IMF expects the budget deficit to exceed 6% of GDP in coming years, with federal debt continuing to rise steadily as a share of GDP. The Fund warned that maintaining an overall deficit of 7–8% of GDP could push public debt to roughly 140% of GDP by 2031 and stressed the importance of a clear, front-loaded fiscal consolidation plan to place debt on a downward trajectory.

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