IMF fiscal chief: U.S., China must rein in debt, face different challenges
© Reuters. FILE PHOTO: IMF Director of Fiscal Affairs Vitor Gaspar speaks to reporters at the headquarters of the International Monetary Fund in Washington, U.S., October 12, 2022. REUTERS/James Lawler DugganMARRAKECH, Morocco - The U.S. and China will both need to make major changes to put their medium-term debt and deficit on a sustainable path, International Monetary Fund Fiscal Affairs Director Vitor Gaspar said on Wednesday.
The U.S. and China are fueling a projected return to higher debt levels after two years of falling debt-to-GDP ratios as a post-COVID growth surge fades. The IMF's Fiscal Monitor, released on Oct. 2, shows that the U.S.'s and China's total non-financial public and private debt-to-GDP rates have converged at about 270% of GDP, with the U.S. making up 30% of the global total and China 20%.Gaspar said the challenge for the United States was persistently high and growing budget deficits. The Congressional Budget Office projects U.S.
To fix this problem, Washington will need to make difficult choices, including higher taxes on wealthy individuals, ending tax breaks for fossil fuel production and raising or eliminating the income cap on Social Security taxes, Gaspar said.
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