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article imageIMF: US needs 'credible strategy' on tackling public debt

By Michael Krebs     Apr 13, 2011 in World
Citing concerns over the prospect of a new global economic crisis, the International Monetary Fund warned the US needs to get serious about reducing its massive debt burden.
The International Monetary Fund's global economic outlook largely reflects a recovery in the making, with 4.5 percent growth forecast for both 2011 and 2012, according to IMF research issued on Monday. However, there are risks to the worldwide rebound, and these are found in persistent high unemployment, rising commodity prices, and the mismanagement of individual national debts.
While Portugal's debt crisis has made headlines as a challenge to European Union stability, the IMF is beginning to sound warnings on the ability of the United States to meaningfully reduce its considerable debt burden. The IMF is now concerned that the US government lacks a "credible strategy" in tackling the nation's debt, the Financial Times reported on Tuesday.
The US Debt Clock, ticking as it does, sets the US debt comfortably north of $14 trillion.
US President Barack Obama is under mounting pressure from congressional lawmakers to control spending and to avoid increasing the American debt ceiling, which the National Journal notes has been raised 10 times over the past decade, 3 times under the Obama presidency.
Congressman Paul Ryan R-WI issued a comprehensive plan last week, under what the Republican Party deemed the Roadmap for America's Future. The Ryan plan calls for $6 trillion in cuts, with a primary focus on repealing President Obama's health care legislation and on tackling the ballooning costs of Medicare.
On Wednesday, President Obama will introduce an alternative plan for reducing the US debt and deficits, according to a [i]Voice of America [/i]report.
But the IMF's commentary demonstrates an American need for actions over words.
“It is a risk that if it materializes would have very important consequences ... for the rest of the world. So it is important that the US undertakes fiscal adjustment in a way sooner rather than later,” Carlo Cottarelli, head of fiscal affairs at the IMF told the Financial Times.
More about Imf, International monetary fund, Debt, Deficit, Congress
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