IMF chief warns wealthy nations must cut spending to reduce debt

Summarised from 2 outlets · Updated 14 Oct, 11:03 · Archive

The International Monetary Fund's managing director says the US and other wealthy countries cannot grow their way out of mounting public debt and must reduce spending.

The IMF's managing director Kristalina Georgieva told the autumn meeting of the IMF and World Bank in Bangkok on Wednesday that wealthy nations cannot solve their debt problems through economic growth alone. She said the US, which has accumulated more than $40 trillion in national debt, and other wealthy countries must urgently tackle mounting global debt levels that are straining the global financial system and weighing most heavily on low-income countries.

Georgieva acknowledged that US Treasury Secretary Scott Bessent and other US leaders recognised that the federal deficit and national debt had grown too high. However, she said growth 'cannot deliver fast enough the necessary adjustments'. Governments must instead pursue what experts call 'fiscal consolidation' by reducing deficits. 'There is no magic,' she said. 'You have to go in a direction of tightening that, bringing it down, bringing deficit down.'

Rodrigo Valdes, director of the IMF's Fiscal Affairs Department, warned that fiscal problems in major advanced economies have global consequences. 'The effect of fiscal indiscipline does not stop at the border. It travels to the rest of the world,' he said. Rising debt levels and inflation, partly from high energy costs, have pushed interest rates to multi-decade highs. Among the world's poorest countries, interest payments have reached historic highs relative to revenue, while declining aid is creating financing gaps that some countries cannot close.

How it is being reported

• IMF chief urges US and other nations to rein in debtThe US and other wealthy countries can't grow their way out of mounting public debt, the IMF's boss warns, telling governments to get their spending in order.The West Australian · 14 Oct, 10:42
• IMF chief urges US and other nations to rein in debtThe US and other wealthy countries can't grow their way out of mounting public debt, the IMF's boss warns, telling governments to get their spending in order.Perth Now · 14 Oct, 10:42

In this story: International Monetary Fund · Kristalina Georgieva · United States · Scott Bessent · Bangkok · Rodrigo Valdes

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