The United States cannot grow its way out of a debt load costing taxpayers more than $1 trillion a year in interest, the International Monetary Fund said Wednesday.
Managing Director Kristalina Georgieva told reporters at the Fund’s annual meetings in Bangkok that growth “cannot deliver fast enough the necessary adjustment” and that “some measures will be necessary.” In her opening remarks she told policymakers generally to “make urgent repairs to the fiscal house before the cracks widen,” saying now is the time to raise revenues, rationalize spending and improve public financial management.
Net interest on the public debt totaled $1.14 trillion in fiscal 2026, up 11% from the year before and more than the government spent on Medicare or on the military, according to the Congressional Budget Office.
Treasury Secretary Scott Bessent, who did not attend, has argued growth can do the job. Speaking at Southern Methodist University’s Cox School of Business in Dallas on Sept. 8, he said the country does not have a revenue problem but a spending problem, and that with restraint on spending and 3% growth, “we grow our way out of this.” A week later, he told the House Financial Services Committee that 3% is “when we start bending the debt curve and actually start paying down debt.”
The Fund’s October World Economic Outlook forecasts U.S. growth of 2.3% in 2026 and 2.3% in 2027.
Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations, said consistent 3% growth is “highly unlikely” based on the economy’s performance over the past two decades. He said the Committee for a Responsible Federal Budget now estimates 3.3% growth would be needed just to stabilize the debt-to-GDP ratio, while the Congressional Budget Office projects 1.8% annual growth over the next decade.
At 1.8% growth, Steil said, debt held by the public keeps climbing and reaches 108% by 2030, up from about 100% of GDP this year. Stabilizing total federal spending as interest costs grow would require cuts elsewhere, he said.
“Spending on items important to the American people, such as defense and healthcare, will need to be cut,” he told The Center Square.
In a statement issued Wednesday to the IMF’s steering committee and the World Bank’s Development Committee, Bessent said President Donald Trump’s investment policy is promoting “robust economic growth and prosperity, fiscal prudence, energy abundance, and regulatory modernization.”
Bessent’s statement did not address the federal budget deficit or the national debt. It urged the Fund to sharpen its focus on “non-market policies and practices” and exchange rates, saying the IMF “must exercise its voice on this critical issue or risk being sidelined.”
Borrowing costs have climbed since Bessent’s Dallas remarks. The 10-year Treasury yield closed at 5.21% Tuesday, up from 4.80% on Sept. 8, according to Treasury data. It reached 5.29% on Sept. 30, topping the 5.26% peak set in June 2007 and the highest close since 2002.
In an analysis released Thursday, the Congressional Budget Office found that if rates run 50 basis points above its February projections through 2036, deficits would grow by nearly $2 trillion. At 150 basis points higher, they would grow by $6 trillion. The 10-year closed more than 100 basis points above CBO’s projections that day, according to the Committee for a Responsible Federal Budget.
Treasury said Deputy Secretary Francis Brooke is leading the U.S. delegation in Bangkok. In a statement Friday, the department said its engagement there would be guided by “ensuring that the international financial institutions and the broader international economic system advance US economic and national security interests.” A Treasury spokesperson reached by phone Wednesday said officials were at the meetings and asked for additional time to respond to questions about the secretary’s growth projections.
