(NewsWorthy.news) – The International Monetary Fund (IMF) recently criticized the United States for its trade policy and financial deficits.
The organization released its annual evaluation last week, describing America’s economy as having had a “remarkable performance” with the hope of continued growth in the future. But it also drew hard lines on certain issues that must be addressed immediately.
According to the IMF summary, America’s fiscal deficit has grown “too large,” leading to a “sustained upward trajectory” of the “public-debt-GDP ratio.” The group pointed out that growing trade limitations and “insufficient progress” related to fixing problems outlined in 2023 are both presenting “important downside risks.”
Based on the current trajectory, the debt-to-GDP ratio is expected to reach 140% by 2032 due to chronic deficits. Estimates from the United States itself shows that, by 2034, national debt will reach $56.9 trillion, which is significantly greater than previous estimates.
The American government is already set to finance the debt amid rising interest rates, causing greater concern for financial stability and sparking expert warnings of inevitable fallout. In response, the IMF has recommended that policies be enacted which will better use discretionary spending and increase both indirect and income taxes.
The organization further said that standoffs with the partisan debt ceiling must cease, citing the height of the issue in 2023. Last year, both Republicans and Democrats disagreed over funding to the point when the country nearly reached a default.
According to the IMF, this issue stirs up “systemic risks” to both the international and American economy which “are entirely avoidable.” The report added that the problem can be sidestepped with “institutional changes” that secure the automatic transfer of “corresponding space” from approved appropriations to the debt ceiling.
The IMF also said that “concrete actions” in the United States banking system has “been lacking,” citing the short-lived financial scare last year when the Silicon Valley Bank temporarily failed. America must tighten and strengthen its banking policies, the IMF said, while also decreasing the number of uninsured deposits.
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