Treasury dismisses IMF debt alarm as US yields hold above 5%
The remarks came in response to IMF Managing Director Kristalina Georgieva, who warned delegates at the IMF-World Bank annual meetings in Bangkok on Wednesday that strong US economic growth would not be enough to put the nation’s $40 trillion-plus federal debt on a sustainable path.
She called for fiscal consolidation alongside growth strategies.
A forecast record under scrutiny
Zervos made his case through a list of historical miscalls. “In 2008, [the IMF’s World Economic Outlook] had world growth at 3% and we had the first global contraction in post-world history a year later. We saw them positive on Southeast Asia in 1997 before the collapse,” he said.
He continued: “We saw them very negative on Russia in 2022, and Russia actually barely saw a blip down in growth before it started growing strongly. We saw them very positive on Argentina after their big bailout of $57 billion. And by 2020, Argentina was basically in default again. And the history books go on and on, whether it’s Greece, whether it was the transitory call on inflation in the US.”
“So take it all with a grain of salt,” Zervos added. The IMF’s Georgieva has issued similar warnings to other major economies.
