Treasury Secretary Bessent dismisses IMF growth cuts
Treasury Secretary Scott Bessent says the IMF and World Bank overreacted by cutting growth forecasts. He expects the U.S. to manage price spikes quickly.
United States Treasury Secretary Scott Bessent has dismissed recent economic forecasts from the International Monetary Fund (IMF) and the World Bank, suggesting that the institutions likely overreacted to the potential impact of Middle Eastern conflicts. Speaking in Washington, Bessent noted that while these organizations have lowered growth expectations and raised inflation projections, he remains confident in the resilience of the American economy.
The IMF recently reduced its global growth outlook, citing energy price spikes linked to regional instability. The fund indicated that without the conflict, it would have upgraded its growth forecast to 3.4%. However, Bessent characterized the institutional response as excessive during his remarks to reporters and at an event hosted by the Institute of International Finance.
I think that they probably overreacted, but well see.
Bessent observed that several nations in Europe and Asia are currently utilizing industrial or consumer subsidies to address supply chain disruptions, which he warned could lead to more persistent inflation in those regions. In contrast, he asserted that the United States would cycle through higher prices very quickly, avoiding the prolonged inflationary effects and increased borrowing seen in countries with heavy subsidy programs.
Despite his critique of the forecasts, Bessent stated that the leadership of both the IMF and the World Bank has been increasingly responsive to his calls for a return to their core missions of macroeconomic stability and development. He suggested that both institutions are moving away from secondary issues, such as climate change, to align more closely with American priorities and interests.
As evidence of this alignment, the Secretary highlighted the World Bank's decision to lift its ban on nuclear power projects. He also noted that the IMF has been working in close coordination with the Treasury Department regarding financial matters in Argentina and the process of bringing Venezuela back into the global financial system.
I think they understand the U.S. point of view, and I think they want to be good partners.
Bessent further noted that the working relationship has been strengthened by the presence of his former chief of staff, Dan Katz, who now serves as a senior official at the IMF. While praising the current alignment, the Secretary reiterated his ongoing call for the IMF to sell its golf course located in a suburb of Maryland.
I think that there was some inertia and some weeding out to do of past programs, but I think we are very aligned now.
