BRICS: IMF Economist Cautions of Potential US Fiscal Crisis Amid Soaring Borrowing

Former Chief Economist of the International Monetary Fund (IMF), Olivier Blanchard, is sounding a warning about the potential for a severe fiscal crisis in the United States. The country is experiencing a daily surge in the debt deficit, with the deficit expanding rapidly due to the borrowing of trillions of dollars, leading to an uncontrollable $34 trillion debt. This escalating debt situation is causing apprehension not only in the United States but also among BRICS and other developing nations that hold US dollars in their Central Bank reserves.

The repercussions of the mounting debt extend beyond the United States, affecting economies in BRICS and other developing nations. Consequently, relying on the US dollar as a reserve currency becomes increasingly precarious, given the unbridled nature of the US debt crisis.

Blanchard, the IMF economist, conveyed to Bloomberg that a potential financial downturn in the United States could work to the advantage of BRICS and other developing countries. He pointed out that BRICS nations are gradually distancing themselves from the US dollar, and a crisis in the United States would likely enhance the value of their local currencies and bolster their domestic economies.