IMF’s Gita Gopinath Urges US To Address Debt And Policy Uncertainty

India-West News Desk

WASHINGTON, DC – In a significant warning the International Monetary Fund’s Deputy Managing Director Gita Gopinath has called on the United States to urgently curb its “excessively large” fiscal deficits and tackle its “ever-increasing” debt burden. Her remarks, published in an interview with The Financial Times, underscore growing international concern over the U.S. economic trajectory.

Gopinath’s statements come just days after Moody’s downgraded the U.S. sovereign credit rating, highlighting the federal government’s failure to control its escalating $36 trillion debt and persistent large deficits. Moody’s, the last of the three major ratings agencies, cited an unsustainable fiscal path and a lack of agreement among administrations and Congress to reverse the trend of large annual deficits and surging interest costs.

Beyond fiscal challenges, Gopinath flagged “very elevated” uncertainty in U.S. trade policy. While acknowledging recent positive developments like tariff rollbacks on China, she cautioned that rising trade barriers could significantly slow global growth. “There is a very high level of uncertainty,” Gopinath told the FT.

The IMF, in its April outlook, already cut its U.S. growth forecast for 2025 to 1.8 percent, down from 2.7 percent in January, attributing the downgrade to trade friction and high borrowing costs. The fund also increased the probability of a U.S. recession this year to 40 percent.

President Donald Trump’s push to extend tax cuts and add further incentives, coupled with tariffs, draws skepticism. Economists suggest these moves could widen the fiscal gap and risk trade wars. Market participants remain unconvinced by Trump’s fiscal roadmap, citing the widening deficit and rising recession risks. Spending cuts envisioned by Elon Musk’s Department of Government Efficiency have reportedly fallen short.