IMF urges the US to take urgent fiscal measures in the face of growing debt

The International Monetary Fund (IMF) has issued a warning to the United States, urging the government to take urgent fiscal measures to address the growing federal debt and increasing deficits. In a detailed report presented by IMF technicians during the annual review of the "Article IV" of the IMF on US economic policies, the need for greater control of public finances was highlighted amidst the strong economic growth the country has experienced. One of the IMF's key recommendations is that the Federal Reserve (Fed) should not cut interest rates until "late 2024," despite pressure to stimulate the economy. Pierre-Olivier Gourinchas, chief economist at the IMF, mentioned that the Fed could postpone monetary policy easing due to the strength of the labor market, but the technical report emphasizes that any changes in this regard should be carefully considered to avoid surprises in inflation. Increasing taxes is another measure the IMF suggests to contain debt, including households with incomes below $400,000 annually, as set by President Joe Biden's administration. This proposal comes in a context where both Republicans and Democrats are debating tax and spending proposals ahead of the November presidential elections. The IMF's concern lies in the risks posed by inflation, particularly in light of recent data showing a rise in prices. Therefore, there is an emphasis on waiting for inflation to sustainably return to the 2% target before considering any adjustments to interest rates. This measure, according to the report, would help ensure economic stability and prevent inflation from getting out of control. The IMF's proposal to increase taxes and delay interest rate cuts may generate debate and controversy in the political and economic sphere of the United States. While some sectors may support these measures as necessary to maintain fiscal stability, others may argue that increasing taxes could affect economic recovery and that delaying monetary policy easing could hinder growth. The economic challenges facing the United States amidst the pandemic and subsequent recovery present dilemmas and tough decisions for authorities. In this sense, coordination between the government, the Fed, and other key actors will be crucial to find a balance that promotes sustainable growth, controls debt, and maintains long-term financial stability. According to the IMF, fiscal and monetary prudence are essential at this critical moment, and decisions made in the coming years will have a significant impact on the US economy and the global outlook. Therefore, it is crucial that informed and strategic decisions are made and responsible policies are implemented to ensure a strong and sustainable economic future for the country. In conclusion, the IMF's recommendations to increase taxes, delay interest rate cuts, and maintain a prudent fiscal stance reflect concerns about the growing debt and inflation risks in the United States. These suggestions pose a challenge for authorities and underscore the importance of making informed and strategic decisions to strengthen the economy and protect it from possible long-term imbalances.