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U.S. Treasury dismisses IMF debt warning and 'messy' forecasting
Treasury counselor David Zervos tells CNBC the IMF should examine its own forecasting record before criticising US fiscal policy, responding to IMF Managing Director Kristalina Georgieva’s view that US growth alone will not reduce debt fast enough without fiscal measures. The exchange comes with US debt above $40 trillion and 10-year Treasury yields still above 5%, keeping scrutiny on the fiscal outlook.
David Zervos, newly appointed counselor to the US Treasury Secretary, pushed back on recent IMF criticism of US fiscal policy. Speaking to CNBC in emailed comments, he argued that the IMF should “check its own forecasting record” before pointing to US debt sustainability concerns, adding that the IMF’s past outlooks have often been “messy” and citing examples of when IMF forecasts proved wrong in various episodes (including outcomes he links to post-forecast surprises).
The comments were framed as a response to IMF Managing Director Kristalina Georgieva, who warned that strong US economic growth would not, by itself, be sufficient to put the mounting federal debt on a sustainable path without fiscal measures. The exchange also referenced remarks by US Treasury Secretary Scott Bessent earlier in the year suggesting the US could address its rising debt-to-GDP ratio by “grow[ing] our way out” of it. In the background, the article notes US debt has surpassed $40 trillion and that 10-year Treasury yields remain above 5%, conditions that tend to intensify scrutiny of the path for debt servicing.
For FX markets, the practical question is how this policy disagreement affects perceptions of fiscal risk and the credibility of adjustment plans at a time when borrowing costs are elevated. Traders should watch whether further official statements narrow or widen the gap with IMF messaging, and whether bond-yield persistence keeps re-pricing the macro risk embedded in US rates.
Why this matters for FX
This is macro-relevant because it speaks directly to the policy credibility debate around US fiscal sustainability at a time when the US is paying high interest rates. If Treasury’s pushback reinforces confidence that fiscal concerns are being overstated, it can support US risk sentiment and the USD via lower perceived tail risk; if it instead sharpens the public policy disagreement with the IMF, it can keep fiscal-risk premia elevated. The key FX transmission is through interest-rate and risk-premium expectations for US assets (government bond yields, term premium) and broader global risk sentiment, which can spill over into USD funding and safe-haven flows.