IMF presses US to cut deficits as debt tops $40 trillion
Why it matters: Treasury yields near 5.2% are raising borrowing costs and adding pressure on poorer countries already struggling with debt payments.
The International Monetary Fund pushed the United States to do more than rely on economic growth to shrink its budget gap, warning that federal debt above $40 trillion is adding to global financial strain. Speaking at the IMF-World Bank meetings in Bangkok on Wednesday, Managing Director Kristalina Georgieva said growth would help but would not reduce deficits fast enough on its own. She pointed to rising bond yields, with the benchmark 10-year Treasury yield near 5.2%, as a sign investors are demanding higher compensation to hold government debt. IMF officials said the spillover is hitting lower-income countries hardest, as higher global borrowing costs and shrinking aid force tougher budget trade-offs.