- The IMF projects the overall U.S. federal deficit will dip to 6.5% of gross domestic product this year, down from 7.3% in 2024
- The multinational fund cited increased tariff revenues for the decline
- The IMF highlighted uncertainty surrounding the rollout of higher tariffs and potential revenue increases
The International Monetary Fund forecasts U.S. tariffs will help lower the country’s fiscal deficit a touch in 2025 even as the U.S. growth and inflation outlooks worsen thanks to an intensifying trade war.
The Fiscal Monitor report from the 191-nation group released Wednesday projects the overall U.S. federal deficit will fall to 6.5% of gross domestic product this year, down from 7.3% in 2024.
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If the total size of U.S. government debt continues to surge, the IMF thinks it will push up longer-term interest rates and the cost of financing the debt.
“Specifically, an increase of 10 percentage points of GDP in U.S. public debt between 2024 and 2029 could lead to a 60-basis-point rise in the 5-year forward to 10-year rate,” the IMF staff wrote. One basis point equals 1/100th of a percent, or 0.01.