(MENAFN) The International Monetary Fund (IMF) has sounded the alarm regarding the United States' fiscal trajectory, expressing concerns over the burgeoning national debt and its implications for global economic stability. In its latest World Economic Outlook, the IMF highlighted the significant increase in the United States federal budget deficit, which surged from USD1.4 trillion in fiscal 2022 to USD1.7 trillion in the following year.
While acknowledging the United State's remarkable economic performance as a key driver of global growth, the IMF cautioned against the unsustainable fiscal stance adopted by the United States government. The report underscored the mismatch between current fiscal policies and long-term fiscal sustainability, citing the escalating national debt, which surpassed USD34 trillion in December, as a pressing concern.
According to the IMF, the ballooning debt levels and widening fiscal deficit pose a dual threat, exacerbating inflationary pressures and jeopardizing financial stability on a global scale. The report emphasized the urgent need for corrective action, warning that the status quo is untenable in the long run.
The IMF's remarks come amid mounting apprehension over the United State's fiscal health, particularly in light of the government's recent decision to suspend the debt ceiling until January 2025. This move, aimed at averting a potentially catastrophic default, has allowed unrestrained borrowing, resulting in a rapid escalation of the national debt.
Looking ahead, projections by the Congressional Budget Office (CBO) indicate a worrisome trajectory, with public debt projected to soar by an additional USD19 trillion over the next decade. Factors such as the aging population and rising interest expenses are expected to further strain the fiscal landscape, raising concerns about the sustainability of United States fiscal policy.
Against this backdrop, the IMF's critique serves as a stark reminder of the urgent need for the United States government to address its fiscal challenges and pursue measures aimed at achieving long-term fiscal sustainability. Failure to do so could have far-reaching consequences not only for the United States economy but also for the broader global financial system.
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