IMF urges US to tackle debt, China to rely less on exports

The International Monetary Fund has urged the United States to take stronger action to control its rising public debt and called on China to shift towards domestic consumption rather than relying heavily on exports to drive economic growth.

IMF Managing Director Kristalina Georgieva delivered the recommendations on Wednesday during the IMF and World Bank annual meetings in Bangkok, Thailand, as policymakers faced mounting concerns about government borrowing, inflation and global trade imbalances.

Georgieva said economic growth alone would not be sufficient to reduce the United States’ debt burden, arguing that additional fiscal measures would be needed to make public finances more sustainable.

“The authorities very much rely on strong growth in the United States” to help reduce debt, she said, according to Reuters. She added that growth could help, but would not deliver the necessary adjustments quickly enough without further action.

The IMF chief’s comments come amid concerns about rising borrowing costs and increasing pressure on government budgets. Higher bond yields can make it more expensive for governments to service existing debt and raise funds for public spending.

Georgieva’s warning was reinforced by the IMF’s Fiscal Monitor report, which said delays in adjusting public finances could make the task more difficult in the coming years. The fund has encouraged governments to improve tax collection, control spending and protect investments that support long-term growth, including education, skills and digital infrastructure.

The IMF also called on China to rebalance its economy by encouraging households to spend more and reducing its dependence on exports.

China’s export-driven growth model has contributed to large trade surpluses, prompting concerns among trading partners about the impact of Chinese goods on domestic industries. Georgieva said countries with persistent surpluses should take steps to increase domestic demand.

“China needs to spend more, the US has to save more, and Europe has to invest more,” she said.

The recommendations reflect the IMF’s concern that economic imbalances between major economies could place additional pressure on the global financial system. The fund has also warned that rising borrowing costs are particularly difficult for low-income countries, which have limited room to respond to economic shocks.

Georgieva urged wealthier nations to provide adequate funding for IMF facilities that support vulnerable economies, including programmes offering low-interest loans and debt-service relief.

The annual meetings have focused on the challenges posed by public debt, trade tensions and the uneven economic effects of artificial intelligence investment.

The IMF’s recommendations underline the need for major economies to make policy adjustments rather than depend solely on stronger growth to address their financial and trade challenges.

(Reuters)