IMF chief says Scott Bessent’s growth plans won’t reduce US debt

BANGKOK — The head of the International Monetary Fund urged Treasury Secretary Scott Bessent to reduce the deficit, warning that his plan to rely on growth to bring the U.S. government’s debt under control is not enough.

“Growth helps of course, but it cannot make the necessary adjustments quickly enough,” Managing Director Kristalina Georgieva said on a panel Wednesday at the annual meetings of the IMF and World Bank in Bangkok. “Certain (fiscal) measures would be necessary.”

Georgieva said Bessent recognized that federal deficits and overall debt had become “too high” and that measures to improve the budget balance and reduce debt were needed. But “the authorities are counting a lot on strong growth in the United States” to bring them down, she added.

Bessent and Trump administration officials have touted resilient economic growth, driven by the development of artificial intelligence, the reshoring of manufacturing and tax cuts for consumers, as crucial tools for improving the U.S. fiscal situation.

“With 3% growth we can get out of this situation,” Bessent said last month. He argued that sustained growth above 3%, combined with spending control, could reduce the debt ratio and bend the debt/GDP curve.

U.S. federal debt has surpassed 100% of gross domestic product, a once-unthinkable threshold, with public debt surpassing $40 trillion and on track to break a record set in the aftermath of World War II.

The U.S. government has historically spent more than it collects in taxes, engaging in lopsided spending in the decades after President Bill Clinton’s brief attempt to balance the budget in the 1990s. But debt-financed spending has accelerated sharply in recent years. Trump cut taxes during his first term and signed the first Covid relief packages in 2020, which Joe Biden followed with a $1.9 trillion stimulus package in 2021.

This federal spending helped avoid a recession, but also fueled inflation that still weighs on American households and businesses.

Before his nomination, Bessent said he wanted Trump to reduce the deficit to less than 4% of GDP by the end of his term, and said in August that the U.S. budget deficit had likely peaked.

The U.S. Treasury market has been battered this year, with yields hitting multi-decade highs as investors bet that rising energy costs and heavy spending on AI will keep borrowing costs higher. Benchmark 10-year yields inched closer to their highest level since 2002, settling at around 5.2% on Wednesday.

Although budget figures for the fiscal year ending September 30 have not yet been released, the deficit is expected to exceed 6% of GDP, compared to 5.8% for the 2025 fiscal year.

“With the government running an annual budget deficit of 6% of GDP, the debt will increase by another $7 billion by the end of today — and every day after that,” Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations, said in a Sept. 25 memo.

Steil also warned that it might be “reckless” for Washington to declare the debt crisis resolved by backing unsupported projections and pushing for spending and revenue reforms.

The IMF, which released its October World Economic Outlook on Tuesday, forecasts U.S. growth of 2.3% in 2026 and 2027, and forecasts that U.S. gross government debt will reach 142% of GDP by 2031.

IMF chief Georgieva also urged governments to establish credible medium-term plans to control deficits instead of relying solely on stronger growth, as global public debt approaches 100% of GDP before the end of the decade, the highest since World War II. Bessent reportedly missed this week’s meetings to attend “national engagements.”