IMF Projects 2011 U.S. Deficit As Largest Among Developed Nation

IMF Projects 2011 U.S. Deficit As Largest Among Developed Nation



The U.S. fiscal deficit is set to be the largest among major developed economies this year, beating out Japan and the U.K., with a shortfall representing 10.8% of GDP, the IMF said in a report released today.

President Barack Obama will unveil long-term proposals for reducing the deficit to sustainable levels and getting the national debt under control on Wednesday. He will have to cut the deficit by at least 5% of GDP to attain his pledge of halving the deficit by the end of his four-year term.

The IMF wrote in its Fiscal Monitor report, "Market concerns about sustainability remain subdued in the U.S., but a further delay of action could be fiscally costly, with deficit increases exacerbated by rising yields,"

The IMF said most advanced economies are taking steps to reign in budget shortfalls, while two of the world's three largest economies, Japan and the United States, have delayed such measures.

The IMF expressed concern that upcoming elections in Japan and the United States, as well as France, could complicate policy efforts needed to reduce deficit spending.