IMF Managing Director Kristalina Georgieva, during a press conference devoted to the annual review of US economic policy, emphasized that the current account deficit requires special attention.
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Deficits under the IMF's microscope
Faced with the U.S. Supreme Court's decision to find President Donald Trump's sweeping tariffs unlawful, the government resorted to the provisions of the 1974 Trade Act to introduce new replacement tariffs. They were aimed at improving the balance of payments.
However, as Nigel Chalk, the IMF's director for the Western Hemisphere, noted, the real solution to the problem would be to reduce the fiscal deficit. According to the Fund's estimates, the current account deficit will amount to 3.5% in the near future. up to 4.0 percent GDP.
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The first economic policy review of the Trump administration, conducted under Article IV of the IMF charter, pointed to stable forecasts of US economic growth at 2.4%. in 2026. At the same time, the Fund warned that inflation may fall short of the Federal Reserve's 2% target. before the beginning of 2027which results from uncertainty regarding the further development of the economy.
Growing public debt is a challenge to stability
The IMF also took notice to the alarmingly high level of the US budget deficit, which is expected to remain at 7% in the coming years. up to 8 percent GDP. This is more than twice as much as earlier forecasts by US Treasury Secretary Scott Bessent. Moreover, the consolidated public debt is expected to reach 140%. GDP by 2031
In its initial statement, the IMF warned that “While the risk of sovereign debt stress in the United States is low, the upward trend in the government debt-to-GDP ratio and rising levels of short-term debt to GDP pose a growing threat to the stability of the U.S. and global economies.”
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The IMF's recommendations indicate the need to take consolidation measures in fiscal policy, which could contribute to improving the balance of payments and reducing economic risk.
