In what The Financial Times describes as an “unusually stern rebuke,” the International Monetary Fund says that the United States “urgently” needs a “credible strategy to stabilize public debt.”
An IMF analysis points to the United States as the world’s “only large advanced economy” – with the exception of earthquake-ravaged Japan – that’s looking at an increased deficit this year.
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Further, the IMF’s April 2011 World Economic Outlook, reads:
[T]he right policy mix for the United States is one of continued monetary accommodation alongside moves to put ï¬scal balances on a sounder footing. A credible strategy to stabilize public debt in the medium term, and a down payment on ï¬scal consolidation in 2011, are urgently needed.
“It is a risk that if it materialises would have very important consequencesâ…âfor the rest of the world,” Carlo Cottarelli, head of fiscal affairs for the IMF, told The Financial Times (subscription required). “So it is important that the US undertakes fiscal adjustment in a way sooner rather than later.”
In response, the U.S. Treasury told Reuters that the U.S. is committed to meeting its G20 deficit targets.
“We will meet our commitments to the G20 in Toronto and look forward to working with Congress to establish a credible, multiyear path to ensure our fiscal sustainability while delivering strong economic growth,” a spokeswoman said.
President Obama plans to outline a long-term debt plan in a speech on Wednesday.
