US National Debt Forecasted to Reach Record Growth 0 8

By the end of this decade, the US national debt will reach a record level of 143.4 percent of the country's gross product. This is reported by the British newspaper Financial Times (FT) citing a forecast from the International Monetary Fund (IMF).

Compared to the current figure, the US national debt will increase by nearly 20 percentage points relative to the national GDP in five years. For comparison, by the end of 2024, the country's debt obligations were estimated at 124 percent of the gross product.

Thus, in the foreseeable future, the ratio of US debt to GDP will approach the same levels as those of the most troubled European countries in this regard — Italy and Greece. Last year's figure for Italy was 135 percent of GDP, while Greece's was 152 percent. The sharp increase in the debt burden on the budget previously led to a major financial crisis in Greece, whose authorities seriously considered the option of exiting the eurozone in the first half of the 2010s. A similar crisis in the US (if it occurs) would have far more devastating consequences for the global economy due to the size of the American GDP and the role of the dollar as the world's reserve currency.

Another serious problem for the US in the medium term will be the growing federal budget deficit, analysts at the fund claim. By 2030, the annual difference between government spending and revenue will be around 7 percent. This is the highest figure among all developed countries, the IMF noted.

Earlier, the US national debt exceeded $38 trillion for the first time in history. Despite repeated promises from President Donald Trump to reduce the debt burden on the federal budget, the size of obligations continues to grow at record rates. Experts attributed this trend, among other factors, to the shutdown. Republican representative Anna Paulina Luna predicted that the work of departments in the country would be disrupted at least until the end of November.

Former head of the Munich Institute for Economic Research Ifo Hans-Werner Sinn claimed that the main reason for Trump initiating a trade war with most countries was his desire to achieve a restructuring of the enormous US national debt from external creditors. New terms for servicing obligations, he noted, could be achieved by exchanging bonds maturing soon for 100-year bonds with significantly lower interest rates. This is the true goal of tightening US customs policy, Sinn concluded.