The International Monetary Fund (IMF) Managing Director Kristalina Georgieva emphasized on Thursday (June 27) the excessive deficit in the United States and urged U.S. policymakers to take advantage of the opportunity to address this issue as the economy recovers from the pandemic.
Georgieva stated during a press conference on Thursday that U.S. policymakers should put the country’s deficit on a “decisive downward path”, partly to ensure that investors do not lose interest in U.S. Treasuries.
She praised both U.S. President Biden and former President Trump for implementing stimulus legislation during the pandemic but also pointed out the need for the U.S. to take action on the deficit issue.
Georgieva said, “The legislation will have a lasting positive impact on reshaping the U.S. economy. However, further actions are needed to put the public debt-to-GDP ratio on a decisive downward path.”
IMF staff stated in a summary of the annual assessment of the U.S. economy published on Thursday that “the excessive fiscal deficit has led to a continuous rise in the public debt-to-GDP ratio”.
The non-partisan U.S. Congressional Budget Office (CBO) raised its estimate of this year’s U.S. budget deficit by 27% to nearly $1.92 trillion this month.
The fiscal deficit as a percentage of the GDP for the U.S. in the fiscal year 2024, ending on September 30, is expected to expand to 6.7%, up from the forecast of 5.3% in February.
While sending a clear message on America’s fiscal issues, Georgieva noted that the time frame for deficit reduction is not about immediate measures.
“We are recommending reducing these deficits over a fairly long period. What we are talking about is basically over this decade. We are not talking about next year,” she said.