IMF highlight importance for US to tackle budget deficit amid global growth concerns
Date
4/22/2024 3:44:11 AM
(MENAFN)
Geeta Gopinath, the First Deputy Managing Director of the International Monetary Fund (IMF), underscored the need for the United States to take decisive action to address its high budget deficit during a financial forum held as part of the spring meetings of the IMF and the World Bank. While acknowledging that the deficit plays a role in driving global growth by stimulating domestic demand within the US, Gopinath emphasized the importance of increasing revenues to mitigate the adverse effects of sustained deficit levels.
Gopinath highlighted the expectation that the US deficit will continue to rise in the coming years, with the country's debt curve being among the steepest globally. Despite the supportive role that high deficit levels play in fostering growth and demand within the United States, Gopinath cautioned that they also have broader implications, including higher interest rates and a strengthened dollar, which could pose challenges for the global economy.
The IMF's assessment anticipates the US deficit reaching 6.67 percent of GDP this year and rising to 7.06 percent by 2025, marking a significant increase from the 3.5 percent recorded in 2015. In light of these projections, Gopinath reiterated the IMF's longstanding recommendation for the US to implement measures aimed at raising tax revenues and reforming Social Security and Medicare programs for older Americans to effectively address the deficit.
Looking ahead, Gopinath indicated that the IMF's upcoming annual review of US economic policies will once again emphasize the importance of fiscal reforms to enhance long-term fiscal sustainability. By advocating for measures to boost revenues and reform entitlement programs, the IMF aims to support efforts to reduce the deficit and foster a more stable and resilient economic outlook for both the United States and the broader global economy.
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