International Monetary Fund (IMF) Managing Director Kristalina Georgieva has urged the United States and other wealthy economies to take stronger steps to reduce their debt and budget deficits, warning that rising borrowing costs are increasingly affecting poorer countries and the wider global financial system.
Speaking at the IMF and World Bank annual meetings in Bangkok, Thailand, Georgieva said economic growth alone would not be sufficient to bring the United States’ debt burden under control. She called for fiscal measures to reduce deficits and make public finances more sustainable.
IMF Says U.S. Growth Alone Cannot Solve Debt Problem
Georgieva said U.S. authorities are relying heavily on continued economic growth to help manage the country’s growing debt. However, she argued that growth would not deliver the necessary adjustment quickly enough.
According to the IMF chief, the United States needs additional fiscal measures alongside growth to bring its deficit and debt onto a more sustainable path.
The warning comes as U.S. national debt has surpassed $40 trillion, while rising government bond yields have increased the cost of borrowing and contributed to volatility in financial markets.
The IMF has increasingly focused on the fiscal position of advanced economies as borrowing costs remain elevated. Its latest assessments indicate that high debt levels are limiting governments’ ability to respond to new economic shocks.
Rising Debt Is Spreading Pressure to Developing Countries
The IMF said the consequences of high debt in wealthy economies extend beyond their borders.
Rodrigo Valdes, director of the IMF’s Fiscal Affairs Department, said fiscal problems in major advanced economies can affect the rest of the world through higher interest rates and borrowing costs.
When yields on government bonds in major economies rise, investors can demand higher returns elsewhere as well. This can make it more expensive for developing countries to borrow money and refinance existing obligations.
The pressure is particularly significant for low-income countries that already have limited fiscal space.
The IMF said interest payments in the world’s poorest countries have reached historically high levels relative to government revenues. As a result, some governments are being forced to make difficult choices between servicing their debts and funding essential services for vulnerable populations.
Developing Countries Facing Higher Debt-Service Costs
Georgieva also highlighted the growing divergence between advanced and developing economies.
According to the IMF, average debt-service costs for low-income countries have risen to about 14% of government revenue, compared with 6% a decade ago. Higher borrowing costs, weaker development assistance and elevated food and energy prices have compounded the pressure.
Officials from developing countries have warned that the additional debt burden is restricting spending on infrastructure, education, healthcare and other investments needed to support long-term economic growth.
The United Nations Development Programme has also highlighted the difficulties facing developing economies as high borrowing costs reduce the money available for investment and job creation.
IMF Calls for Fiscal Consolidation
The IMF's message is increasingly focused on what it calls fiscal consolidation — measures aimed at bringing government revenues and spending into better balance and slowing the accumulation of debt.
The Fund has warned that postponing reforms could make the eventual adjustment more difficult, particularly if borrowing costs remain high.
Its latest forecasts show that advanced economies are heading toward significant budget deficits. Net borrowing among advanced economies is projected to reach 5.2% of GDP in 2026, while U.S. and Chinese deficits are expected to exceed 8% of GDP under the IMF's broader fiscal measurement.
The IMF has therefore urged governments to contain spending, improve public-sector efficiency and strengthen revenue systems while protecting productive investment.
U.S. Debt Debate Comes Amid Higher Bond Yields
The warning comes at a sensitive time for U.S. financial markets.
Higher Treasury yields reflect, among other factors, investor concerns about the scale of government borrowing and the longer-term sustainability of public finances. The IMF has separately cautioned advanced economies against excessive reliance on short-term borrowing because it can expose governments more quickly to higher refinancing costs when inflation and interest rates rise.
For the United States, the combination of large fiscal deficits, elevated debt and higher interest costs could increasingly restrict the government's ability to respond to future economic shocks without further increasing borrowing.
Georgieva's comments therefore place greater emphasis on addressing the underlying fiscal imbalance rather than relying solely on stronger economic growth.
IMF Also Calls for Greater Support for Poor Countries
While urging wealthy economies to strengthen their public finances, Georgieva also called on IMF member countries to increase support for vulnerable and low-income nations.
She urged members to fulfill commitments to funds such as the Poverty Reduction and Growth Trust, which provides low- and zero-interest financing to low-income countries, and the Catastrophe Containment and Relief Trust, which can provide debt-service relief to countries facing severe crises.
The IMF has warned that the combination of high borrowing costs, weaker development assistance and economic shocks risks widening the gap between advanced and developing economies.
Georgieva said the risk of divergence was particularly serious for countries that were already economically vulnerable.
Global Debt Remains a Major Economic Risk
The debt warning forms part of a broader IMF assessment of the global economy.
The Fund has forecast global economic growth of 3.1% for 2026, but continues to identify growing debt, high energy prices, geopolitical tensions and financial-market risks as major threats to stability.
The IMF has also warned that global public debt could exceed 100% of world GDP before the end of the decade, increasing the importance of credible fiscal policies in major economies.
For developing countries, the concern is that fiscal problems in major economies could translate into higher interest rates, weaker capital flows and more expensive access to international financing.
Georgieva's message at the Bangkok meetings was therefore broader than a call for the United States to reduce its debt. It was a warning that fiscal decisions made by the world's largest economies can have consequences across the global financial system.
