US debt burden set to surpass Italy’s IMF warns

By Al Mayadeen English
Source: Financial Times
27 Oct 2025 15:09
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IMF warns that US public debt is on track to exceed Italy’s by 2030, signaling deepening fiscal vulnerabilities and raising global concerns over Washington’s mounting deficits.

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United States President Donald Trump listens as Federal Reserve Chairman Jerome Powell speaks during a visit to the Federal Reserve, on July 24, 2025, in Washington. (AP)

The International Monetary Fund (IMF) has projected that the United States’ government debt will surpass Italy’s by the end of the decade, marking a striking reversal that underscores Washington’s deepening fiscal vulnerabilities and the erosion of its long-standing reputation for financial prudence.

US debt levels approach record highs

According to IMF estimates cited by the Financial Times, the US general government gross debt is expected to reach 143.4% of GDP by 2030, surpassing Italy’s debt ratio for the first time in modern history. Italy, traditionally among Europe’s most indebted economies, is forecast to slightly reduce its debt load over the same period.

The Fund also warned that Washington’s budget deficits are set to remain above 7% of GDP annually for the remainder of the decade, the highest level among advanced economies. Persistent structural deficits, coupled with soaring interest payments, are driving the debt trajectory upward despite sustained economic growth and strong dollar demand.

While Italy and several European economies are gradually stabilizing their public finances, the US fiscal outlook continues to deteriorate, with debt expected to rise faster than the overall economy.

Symbolic reversal of fiscal roles

For decades, Italy was viewed as a cautionary tale of fiscal mismanagement within the eurozone, while the US, backed by the global reserve currency, was seen as a pillar of stability. The IMF’s projections now suggest that a country long considered a “fiscal risk” is improving its balance sheet, while the world’s largest economy is veering toward unsustainable borrowing levels.

Economists note, however, that the comparison must be contextualized. The US issues debt in its own currency and enjoys deep, liquid capital markets, giving it a structural advantage over eurozone economies like Italy, which operate under the European Central Bank’s monetary framework.

Nevertheless, the IMF cautioned that even these advantages have limits, warning that “continued fiscal complacency” could undermine investor confidence and global financial stability.

Rising costs and limited flexibility

The growing debt burden poses long-term risks to the US economy. Interest payments on federal debt are already among the fastest-rising categories of government spending, projected to exceed defense expenditures within the next few years.

High and persistent deficits also reduce Washington’s ability to respond to future economic shocks, leaving limited fiscal space for crisis intervention or major policy initiatives. The IMF noted that without credible deficit reduction measures, the US will face mounting pressure from both domestic and international markets. The warning comes amid a broader surge in global indebtedness. The IMF estimates that total public debt across the world will exceed 100% of global GDP by the end of the decade, fueled by high interest rates and sluggish growth.