Congressional Budget Office director Phillip Swagel analyzes where lawmakers stand to slow down debt growth.
The astronomical rise in the U.S. national debt poses "significant risks" to the global economy and threatens to continue fueling high inflation, according to a new warning from the International Monetary Fund.
In its latest Fiscal Monitor, the Washington-based institution said that it expects the U.S. to record a fiscal deficit of 7.1% in 2025 – more than triple the level in other advanced economies.
"Loose fiscal policy in the United States exerts upward pressure on global interest rates and the dollar," Vitor Gaspar, director of the IMF’s fiscal affairs department, told reporters. "It pushes up funding costs in the rest of the world, thereby exacerbating existing fragilities and risks."
US NATIONAL DEBT TRACKER FOR APRIL 17, 2024: SEE WHAT AMERICAN TAXPAYERS (YOU) OWE IN REAL TIME
The Capitol Building in Washington, DC, US, on Wednesday, Jan. 17, 2024. (Photographer: Julia Nikhinson/Bloomberg via Getty Images / Getty Images)
Under current policies, public debt in the U.S. is projected to nearly double by 2053. The IMF identified "large fiscal slippages" in the U.S. in 2023, with government spending surpassing revenue by 8.8% of GDP – a 4.1% increase from the previous year, despite strong economic growth.
If this trend continues, the Congressional Budget Office anticipates the national debt will grow to an astonishing $54 trillion in the next decade. Higher interest rates are also compounding the pain of higher debt.
Should that debt materialize, it could risk America's economic standing in the world.
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The U.S. is one of four countries that needs to critically address "fundamental imbalances between spending and revenue." The other three are China, Italy and the United Kingdom.
IMF officials participate in a news conference at the annual meetings of the International Monetary Fund and World Bank in Washington, D.C., on April 16, 2024. (Photographer: Samuel Corum/Bloomberg via Getty Images / Getty Images)
The U.S. national debt topped $34 trillion in January after a burst of spending by President Biden and Democratic lawmakers and is well on its way to surpassing $35 trillion.
But the massive amount of spending – though it has helped to propel the economy – also risks reigniting inflation and undermining financial stability worldwide by increasing global funding costs, according to the IMF.
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"It raises short-term risks to the disinflation process, as well as longer-term fiscal and financial stability risks for the global economy," IMF chief economist Pierre-Olivier Gourinchas said Tuesday. "Something will have to give."
FAQs
International Monetary Fund warns of U.S. debt: 'Something will have to give' The International Monetary Fund warned the United States that government spending and increasing national debt are not sustainable and could hurt the global economy.
What is the IMF warning about the US debt? ›
Under current policies, public debt in the U.S. is projected to nearly double by 2053. The IMF identified "large fiscal slippages" in the U.S. in 2023, with government spending surpassing revenue by 8.8% of GDP – a 4.1% increase from the previous year, despite strong economic growth.
What is the US national debt in 2024? ›
U.S. publicly held debt 2013-2024
In April 2024, the public debt of the United States was around 34.62 trillion U.S. dollars, more than two trillion more than in July when it was around 32.6 trillion U.S. dollars.
How much money does the US give to the IMF? ›
The United States contributes $117 billion to the IMF quota (17.46%). In addition, the United States has contributed $44 billion to funds at the IMF that supplement quota resources. As of February 11, 2022, the IMF had total lending commitments around $239.2 billion.
Has the US ever borrowed from the IMF? ›
The United States has borrowed foreign currencies from the IMF on 28 different occasions, more than any other country. We drew about $3 billion of DM and yen in 1978 to help defend the dollar in the exchange markets.
Where is the US debt coming from? ›
The national debt is the sum of a nation's annual budget deficits, offset by any surpluses. A deficit occurs when the government spends more than it raises in revenue. The government borrows money by selling debt obligations to investors to finance its budget deficit.
Which country has most IMF debt? ›
Who owes the IMF money?
- Argentina is the biggest debtor to the IMF, with a total outstanding debt of $42.9bn. ...
- Egypt is the second-largest debtor by amount, with an outstanding balance of $14.9bn. ...
- Ukraine also features among the IMF's largest debtors with a total outstanding debt of almost $12bn.
How did USA owe China so much money? The U.S. debt to China is approximately $1.059 trillion. That's 27.8 percent of the $3.8 trillion in treasury bills, notes, and bonds held by foreign countries. The rest of the $19.9 trillion national debt is owned by either the American people or by the U.S. government itself.
Who has more money than the US government? ›
For context, 31 billionaires are each worth more than the federal government's $38.8 billion in cash, according to the Bloomberg Billionaires Index. Some of them, like fashion mogul Bernard Arnault – are worth a lot more. Arnault, the chairman of luxury goods maker LVMH, has a net worth estimated at $193 billion.
What country does the US give the most money to? ›
Countries That Received the Most Foreign Aid From the U.S. in 2022: Ukraine ($12.4B) Israel ($3.3B) Ethiopia ($2.2B)
The United States, which holds an effective veto over major IMF structural decisions, is the largest shareholder, with 16.5% of the Fund's voting power, followed by Japan at 6.14%, China at 6.08% and Germany at 5.31%.
Who is the IMF funded by? ›
The IMF's resources mainly come from the money that countries pay as their capital subscription (quotas) when they become members. Each member of the IMF is assigned a quota, based broadly on its relative position in the world economy. Countries can then borrow from this pool when they fall into financial difficulty.
Which country has no debt? ›
1) Switzerland
Switzerland is a country that, in practically all economic and social metrics, is an example to follow. With a population of almost 9 million people, Switzerland has no natural resources of its own, no access to the sea, and virtually no public debt.
Which country has the highest debt? ›
Profiles of Select Countries by National Debt
- Japan. Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP. ...
- United States. ...
- China. ...
- Russia.
India is a case in point. Although it is the WB's biggest debtor, its existing stock of WB debt jumped from $5.6bn to $37.1bn between 1980 and 2010. It then almost stopped growing, reaching a peak of $39.7bn at the end of 2021 before declining the following year.
Is US national debt a concern? ›
Debt not a disaster
While the US national debt exceeds $34 trillion, it isn't necessarily a problem for investors.
Does the US have a debt crisis? ›
The national debt has increased every year over the past ten years. Interest expenses during this period have remained fairly stable due to low interest rates and investors' judgement that the U.S. Government has a very low risk of default.
Why is the US so heavily in debt? ›
It began rising at a fast rate in the 1980's and was accelerated through events like the Iraq Wars and the 2008 Great Recession. Most recently, the debt made another big jump thanks to the pandemic with the federal government spending significantly more than it took in to keep the country running.
What is the IMF controversy? ›
The IMF's European programs embroiled the Fund in numerous controversies over the exceptionally large lending, over whether or not to impose losses on private creditors, and over the mix between external financing and internal adjustment undertaken by program countries.
