Source: Press TV
The International Monetary Fund (IMF) has urged the United States to begin addressing its budget deficit before causing another global financial crisis.
On Monday, in its 2011 World Economic Outlook, the IMF said if the US does not take more meaningful action to restrain its growing budget deficit, rates could rise independent of central bank tightening, AFP reported.
The US budget deficit will hit a record $1.65 trillion this year, or 10.9 percent of GDP, according to figures in President Barack Obama's 2012 budget.
The report said the huge government deficit will limit Washington's ability to address problems such as slack domestic demand, high unemployment and still-depressed housing prices.
"The United States stands out as the only large advanced economy where the cyclically adjusted fiscal deficit is expected to increase in 2011 compared with 2010 despite the ongoing economic recovery," the IMF said.
It also urged the US not to try to borrow and spend its way back to economic health.
Obama's top priorities have been the budget deficit and debt and his budget proposals go a long way to meeting the administration's international commitments, the US Treasury Department has said.
"What we have observed is there has been a significant loosening of policies in 2011," said Jorg Decressin, a senior researcher at the IMF.
"And that makes attainment of the objective for 2013 much more difficult, because it will require a large fiscal withdrawal over 2012-2013," she added.
Treasury officials admit that it will be a difficult task, but say the government will not give up.
The United States federal budget for 2011 is $3.8 trillion, up $2 billion from last year.