The International Monetary Fund (IMF) has warned that US debt levels could soon surpass those of Italy and Greece, Financial Times reported. The alarming prediction comes as Donald Trump’s administration announced massive tax cuts and increased defence spending under “One Big Beautiful Bill.”
The US has always kept its total debt below Italy and Greece. But new IMF data shows that by the end of the decade, Washington’s overall debt load will cross both countries, first time in this century.
IMF warns: US debt to go beyond Italy and Greece
According to IMF forecasts, the US is on track to see its debt-to-GDP ratio climb from 125% today to 143% by 2030, a level higher than Italy’s 137% and Greece’s expected 130%. While Italy and Greece have spent years trying to control public spending since the 2008 financial crisis and the COVID-19 pandemic, the US appears to be heading in the opposite direction.
The IMF report highlights how the US has failed to control spending compared to European countries that have long struggled with debt crises. Italy plans to bring its budget deficit down to 2.9% this year, meeting the EU’s 3% cap, better than expected. Greece, too, has managed to reduce its debt levels from its 2020 peak of 210% of GDP. Meanwhile, the US is set to run annual deficits above 7% for the next five years, according to the Financial Times.
Trump’s administration’s “big, beautiful bill,” which delivered major tax cuts, has forced Washington to rely heavily on borrowing to keep the federal budget afloat. The White House has also pledged to build a “golden dome” defence shield. The project could cost nearly $1 trillion. The US Treasury recently reported that the national debt has climbed to $38 trillion, the highest in history. Officials said the debt is now growing faster than at any point outside of the pandemic years.
Over the past six years, the federal deficit has remained above $1 trillion annually, reaching $1.8 trillion in 2025. Estimates for the current fiscal year suggest it could hit $2.2 trillion.
IMF flags widening US deficits compared to European countries
Mahmood Pradhan, head of global macro at Amundi Investment Institute, told the Financial Times that this is “a symbolic moment” for the global economy. “The projections show US debt continuing to rise. That’s the impact of running perpetual deficits,” he said. “But Italy has a weaker growth outlook than the US, so this should not be read as meaning Italy is out of the woods,” he added.
Economists say that while the US enjoys the privilege of borrowing in the world’s reserve currency, its worsening debt could soon change how other countries see America. “Many American politicians tend to look down on Europe’s slow growth,” said James Knightley of ING. “But when you see numbers like these, the conversation changes.”
Trump’s economic plan, “One Big Beautiful Bill”, has spiked government spending while slashing taxes for corporations and wealthier Americans, resulting in more borrowing to keep federal programs funded.