The United States must urgently tackle its “ever-increasing” debt burden and rein in excessively large fiscal deficits, the International Monetary Fund’s First Deputy Managing Director Gita Gopinath has warned. Her comments were published in an interview with the Financial Times on Wednesday, just days after Moody’s downgraded the US sovereign credit rating, citing the government’s failure to control its US$36-trillion debt and persistently high deficits.

Gopinath told the Financial Times, “The US fiscal deficits are too large and they need to be brought down.” She added that the country must address its mounting debt, which she described as “ever-increasing”.

The IMF official also highlighted ongoing uncertainty in US trade policy, despite recent positive developments, such as the Trump administration’s roll-back of tariffs on China and the signing of a US-UK economic agreement. “It is absolutely a positive to have lower average tariff rates than the ones we assumed, but there is a very high level of uncertainty, and we have to see what the new rates will be,” Gopinath said. She noted that the US continues to face “very elevated” trade policy uncertainty.

US President Donald Trump is currently seeking to extend tax cuts introduced in 2017 and add further tax incentives — moves that Gopinath and other economists warn could widen the fiscal gap even further. Moody’s, which last week downgraded the US credit rating, pointed to the inability of successive administrations and Congress to agree on measures to reverse the trend of large annual deficits and rising interest costs.

In its April outlook, the IMF cut its US growth forecast for 2025 to 1.8 per cent, down from 2.7 per cent in January, citing trade friction and high borrowing costs. The Fund also warned of further downside risks from tariff hikes and escalating trade tensions. Gopinath cautioned that the rise in trade barriers and uncertainty could result in a “significant slowdown” in global growth.

Moody’s downgrade marks the first time since 1919 that the agency has lowered the US’s “Aaa” rating, making it the last of the three major ratings agencies to do so. The agency said the downgrade reflected an unsustainable fiscal path and the government’s failure to address surging interest costs and deficits.

Gopinath’s remarks come as market participants remain sceptical about the Administration’s fiscal roadmap, pointing to the widening deficit, volatile bond markets, and rising recession risks.