The US Treasury rejected concerns raised by the International Monetary Fund over America's debt trajectory on Thursday. David Zervos, counselor to Treasury Secretary Scott Bessent, said the IMF should reconsider its track record before criticizing US fiscal policy. He pointed to multiple instances where the IMF's forecasts proved inaccurate, including predicting 3% global growth in 2008 before the world experienced its first post-war contraction a year later.
Zervos cited other examples of IMF misjudgments: optimism about Southeast Asia before its 1997 collapse, pessimism about Russia in 2022 that proved unfounded, and positive assessments of Argentina after a $57 billion bailout that led to default by 2020. His comments responded to IMF Managing Director Kristalina Georgieva, who cautioned during the IMF-World Bank annual meetings in Bangkok that strong US economic growth would not be sufficient to make federal debt sustainable.
Bessent had previously told CNBC in August that the US could "grow our way out" of rising debt-to-GDP ratios, after government debt surpassed $40 trillion. However, many economists warn that mounting interest payments and high deficits have raised the risk of unsustainable debt spirals, though disagreement persists over whether a true fiscal crisis could occur.
Other institutions are also raising alarms. Global debt servicing costs topped $365 trillion in the first half of the year, according to the Institute of International Finance, which warned in September that short-term political fixes were reducing public service spending.