IMF urges US to tighten spending while China should boost domestic demand

At the annual IMF and World Bank gathering in Bangkok, Managing Director Kristalina Georgieva warned that the United States’ soaring debt and budget shortfall cannot be fixed by growth alone, calling for tax or spending reforms. She cited US Treasury Secretary Scott Bessent’s admission that the fiscal gap is too large and warned that higher borrowing costs make postponing adjustments increasingly painful. Georgieva also urged China to pivot its growth strategy toward stronger domestic consumption, not a halt to exports, to reduce reliance on foreign buyers.

IMF officials, including Rodrigo Valdés, stressed that tighter bond yields signal investors demanding higher returns, raising the cost of new borrowing and debt roll-overs. The IMF called for richer countries to invest in competitiveness and for low-income nations to protect education and digital spending as debt service burdens rise.