IMF: Strong growth won't be fast enough to resolve US debt crisis
The International Monetary Fund warned that economic growth alone is insufficient to resolve the United States' debt crisis quickly enough, while the head of the European Central Bank believes the issue requires specific measures.
Translated by Qiyas from الجريدة — Original source
Bloomberg News quoted Georgieva as saying that “authorities rely far too heavily on strong growth in the United States… Of course, growth helps, but it does not deliver the necessary adjustments quickly enough.”
Speaking on the sidelines of the International Monetary Fund’s annual meetings in Bangkok, the Thai capital, she added, “Some measures will be necessary.”
Buisson, who did not attend the current meetings, said the United States would be able to reverse the trajectory of its debt and fiscal deficit, relying on strong economic growth.
Last week, Buisson said, “What matters is the ratio of public debt to gross domestic product, and we will begin to change and reduce this curve… This can happen very quickly.”
He added that sustained GDP growth exceeding 3%, which is the target for the fourth quarter of this year, would help ensure that this goal is met.
This comes as U.S. debt is heading toward unprecedented levels, a key reason behind the sharp rise in long-term borrowing costs that has sparked global concerns.
When asked about the U.S. public debt crisis, European Central Bank President Christine Lagarde referred to statements on fiscal policy in Washington.
Lagarde said, “I heard the IMF Managing Director focusing heavily on the fiscal principles that should be respected,” referring to the size of the U.S. deficit. She added, “It is clear that this is a problematic issue, and it is a matter that any country in that specific category must address.”
Last February, the U.S. Congressional Budget Office warned that the U.S. public debt ratio would rise by 2030 to more than the record high of 106% of GDP set in 1946.
