The United States’ debt burden is projected to exceed that of Italy and Greece by the end of this decade, according to new figures from the International Monetary Fund (IMF) — marking a historic shift that underscores mounting concerns about America’s fiscal trajectory.
The IMF forecasts that U.S. general government gross debt will rise by more than 20 percentage points to reach 143.4% of GDP by 2030, surpassing previous post-pandemic records. This would put the U.S. ahead of Italy and Greece, two countries long associated with fragile public finances.
At the same time, the IMF expects the U.S. budget deficit to remain above 7% of GDP annually until 2030 — the highest among advanced economies tracked by the fund. The outlook contrasts sharply with Italy and Greece, where fiscal tightening and economic reforms are helping to reduce their debt burdens over time.
“It is a symbolic moment,” said Mahmood Pradhan, head of global macro at Amundi Investment Institute. “The projections show the impact of running perpetual deficits. However, Italy still faces weaker growth prospects, so this doesn’t mean it is out of the woods.”
While Italy and Greece are moving toward fiscal stabilization, the IMF expects the U.S. debt-to-GDP ratio to continue climbing beyond 2030, a trend echoed by the Congressional Budget Office (CBO).
Economists note that the U.S. enjoys greater flexibility than European nations because of its role as the issuer of the world’s reserve currency. Still, the data challenge the perception of America’s fiscal superiority. “Many U.S. politicians and investors have looked down on Europe’s slow growth,” said James Knightley, U.S. economist at ING. “But with metrics like this, the conversation changes.”
Under President Joe Biden, the U.S. federal deficit expanded despite strong employment levels. The IMF projections suggest that the Trump administration has not taken substantial action to reverse the trend. However, Joe Lavorgna, economic counsellor to Treasury Secretary Scott Bessent, claimed that recent progress has been made through spending cuts and tariff-driven revenue gains.
IMF data show that the U.S. has maintained lower gross debt than Italy and Greece since 2000. But the trajectory has now shifted. On a net debt basis — which subtracts government financial assets — the U.S. is still about 10 percentage points below Italy’s projected levels by 2030, though the gap is narrowing.
“It’s the net debt that matters most for investors,” said Joe Gagnon of the Peterson Institute for International Economics. “But even that measure is rising.”
Italy, meanwhile, is expected to continue improving its fiscal position. The Meloni government is forecast to achieve a primary surplus of 0.9% of GDP this year, exceeding earlier expectations, and aims to bring its deficit down to 3%, potentially exiting the EU’s deficit procedure ahead of schedule.
Italy’s progress has been rewarded: DBRS Morningstar recently upgraded its sovereign rating to A (low), while Scope Ratings cited stronger tax collection and a more robust labor market as positive factors.
However, analysts warn that the U.S. political gridlock poses a long-term risk. “Democrats don’t want to cut spending and Republicans don’t want to raise taxes,” Gagnon said. “Neither side seems ready to change that dynamic.”
Former IMF chief economist Maury Obstfeld, now a professor at Berkeley, added that optimism about the U.S. fiscal outlook “relies on wishful thinking — on future productivity growth, tariff revenues, demographics, or interest rates — perhaps all of them.”
As Europe reins in its debt, the IMF’s projections highlight a growing irony: the world’s largest economy is now on course to face the same debt challenges it once used as a warning against others.
