IMF Calls for Fiscal Consolidation Amid Rising US Debt Service Costs

The International Monetary Fund released its 2026 Annual Report, noting that government interest payments worldwide have increased by nearly 50% in three years, reaching almost 3% of gross domestic product for deficit countries. Meanwhile, the Congressional Budget Office reported that net interest on the federal debt reached $1.05 trillion in the first 11 months of fiscal 2026, a 12% rise from the previous year. The 10-year Treasury yield closed at 5.11%, its highest level since 2007.

The IMF stated that for deficit countries like the U.S., a credible fiscal consolidation plan could help reduce demand for imports and external financing. This recommendation was made as the U.S. faced high borrowing costs and market indicators showed yields were at their highest levels in nearly two decades.