IMF warns US deficit may stay at 7-8% of GDP, debt seen hitting 140% by 2031
The IMF is urging the United States to curb a rising fiscal deficit it expects to stay at 7-8% of GDP in coming years—more than double Treasury Secretary Scott Bessent’s target—warning public debt could reach 140% of GDP by 2031, Reuters reports.
The International Monetary Fund (IMF) has called on the United States to cut its sharply rising fiscal deficit, saying this is the most effective way to reduce an “excessive” current account deficit and an outsized trade imbalance that remain key concerns under President Donald Trump’s administration.
IMF Managing Director Kristalina Georgieva told reporters after the Fund’s annual policy review of the United States that the country’s current account deficit—estimated at around 3.5% to 4.0% of GDP in the coming years—was “too big”, noting the US government is also aware of the issue.
The comments come after the US Supreme Court struck down Trump’s emergency import tariffs as unlawful. The administration has since turned to Section 122 of the Trade Act of 1974 to impose a new set of tariffs, aimed in part at improving the country’s balance of payments.
The IMF’s Article IV consultation—its first under the Trump administration—kept its January forecast that the US economy would grow a resilient 2.4% in 2026, while inflation may not return to the Federal Reserve’s 2% target until early 2027, reflecting uncertainty over the path of growth and prices.
The Fund’s main warning was fiscal: it expects the US fiscal deficit to remain elevated at 7% to 8% of GDP over the next few years—more than twice the levels targeted by US Treasury Secretary Scott Bessent—and projects consolidated government debt could climb to 140% of GDP by 2031.
In its preliminary Article IV statement, the IMF said the risk of US sovereign stress remains low, but the rising public debt-to-GDP path and higher short-term debt levels represent a growing stability risk for both the US and the global economy.
Nigel Chalk, the IMF’s Western Hemisphere director, said the large current account deficit is largely driven by government overspending, urging Washington to prioritise reducing expenditure or raising revenues—rather than focusing solely on tariffs—to bring the fiscal deficit down.
