(Bloomberg) -- The US keeps increasing its borrowings at a pace that can’t go on indefinitely and should take advantage of its current economic situation to fix that, International Monetary Fund official Vitor Gaspar said.
Speaking in Washington, the head of the fund’s fiscal department and former Portuguese finance minister observed that debt in the world’s biggest economy is much more than it was before the pandemic struck.
“It is growing at about 2 percentage points of GDP every year,” he said. “From that viewpoint, this path of debt cannot continue forever.”
Gaspar said that the US political system does have scope to fix the public finances, at a time and with a mix of policies of its choosing, but that it shouldn’t wait to do so — not least because the country is “in a very favorable economic and financial situation” at present.
“Growth has been outperforming that of other advanced economies, the labor market in the United States shows indicators that are the envy of many other countries, and so the prescription that the time to adjust is now applies to the United States,” he said, adding that “adjustment in the United States is not only good for the United States, it’s also good for the rest for the world.”
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