IMF calls for US to cut deficits amid bond woes, urges China to shift away from exports

IMF Managing Director Kristalina Georgieva has urged the United States to reduce its growing public debt through fiscal adjustments, while China must shift towards domestic consumption instead of relying on export-led growth, according to comments made at the IMF and World Bank annual meetings in Bangkok. Georgieva's Fiscal Affairs Chief, Rodrigo Valdes, emphasized the urgency of this fiscal consolidation, citing inflation, high debt levels, and rising yields as key concerns.

The IMF's Fiscal Monitor report echoed these calls, warning that delays would only exacerbate the problem in the future. Despite US Treasury Secretary Scott Bessent recognizing the need for fiscal policy changes, he remains in favor of domestic engagement ahead of the US midterm elections. China's leaders have been advised to increase domestic consumption to address imbalances, while deficit countries are urged to save more and spend less.

Europe's competitiveness needs improvement, and the IMF has commended Britain's efforts towards fiscal consolidation while not pushing for increased pace.