Scott Bessent’s growth plans aren’t enough to tame surging deficit and debt pile, IMF chief says

“Growth of course helps, but it cannot deliver fast enough the necessary adjustments,” Managing Director Kristalina Georgieva said at a panel Wednesday at the IMF-World Bank annual meetings in Bangkok. “Some [fiscal] measures would be necessary.”

Georgieva said Bessent recognizes that federal deficits and overall debt have grown “too high,” and that measures to improve the budget balance and reduce the debt are necessary. But “the authorities very much rely on strong growth in the United States” to bring them down, she said.

Bessent and Trump administration officials have touted resilient economic growth, driven by the artificial-intelligence build-out, reshoring manufacturing and tax cuts for consumers, as crucial tools to improve the U.S. fiscal posture.

“With 3% growth, we grow our way out of this,” Bessent said last month. He has argued sustained growth above 3%, combined with spending restraint, could lower the debt ratio and bend the debt-to-GDP curve. 

U.S. federal debt has exceeded 100% of gross domestic product, once an unthinkable threshold, with the country’s public debt load surpassing $40 trillion and on track to break a record set in the aftermath of World War II. 

The U.S. government has historically spent more than it collects through taxation, committing to unbalanced spending in the decades since President Bill Clinton briefly managed to balance the budget in the 1990s. But debt-financed spending has sharply accelerated in recent years. Trump cut taxes in his first term and signed the first Covid relief packages in 2020, which Joe Biden followed with a $1.9 trillion stimulus in 2021. 

Before his appointment, Bessent had said he wanted Trump to cut the deficit to less than 4% of GDP by the end of his term, and said in August that the U.S. budget deficit had likely peaked. 

The U.S. Treasury market has been battered this year with yields climbing to multidecade highs, as investors bet that surging energy costs and heavy AI spending will keep borrowing costs higher. Benchmark 10-year yields hovered near their highest level since 2002, standing at around 5.2% on Wednesday.

Although the budget figures for the fiscal year that ended Sept. 30 have not yet been released, the deficit is expected to top 6% of GDP, compared with 5.8% in fiscal 2025.

“With the government running an annual budget deficit of 6 percent of GDP, the debt will rise another $7 billion by the end of today—and each subsequent day,” Benn Steil, senior fellow and director of international economics at Council on Foreign Relations, said in a Sept.25 note.  

Steil also warned that it could be “reckless” for Washington to declare the debt crunch solved by supporting unsupported projections, pressing for spending and revenue reforms. 

The IMF, which released its October World Economic Outlook on Tuesday, forecasts U.S. growth of 2.3% in both 2026 and 2027, and projects U.S. gross government debt reaching 142% of GDP by 2031. 

IMF chief Georgieva has also urged governments to set credible medium-term plans to control deficits instead of relying on stronger growth alone, as global public debt heads toward 100% of GDP before the end of the decade, the highest since World War II. Bessent reportedly missed this week’s meetings to attend to “domestic engagements.”