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المحرر موضوع: US Set for Largest Budget Deficit  (زيارة 1996 مرات)

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US Set for Largest Budget Deficit
« في: يوم 13-04-2011 , س 23:38:33 pm »
US Set for Largest Budget Deficit



The US is set to have the largest budget deficit of major developed economies this year and should narrow it now rather than face tough adjustments in the next two years, the International Monetary Fund said.
The US shortfall will reach 10.8 percent of its gross domestic product this year, ahead of Japan and the UK, the Washington-based IMF said in a report released on Wednesday. It estimates that President Barack Obama will need to cut the deficit by 5 percentage points of GDP in the next two fiscal years, the largest adjustment in “at least half a century”, to meet his pledge of halving it by the end of his four-year term.
“Market concerns about sustainability remain subdued in the US, but a further delay of action could be fiscally costly, with deficit increases exacerbated by rising yields,” the IMF wrote in its Fiscal Monitor report, published several times a year to analyze public finance development, Bloomberg reported.
The IMF recommended “a down payment” in the form of deficit reduction this year that would make the government goal “compatible with a less abrupt withdrawal of stimulus later.”
The US delayed its fiscal tightening with the adoption of a package extending tax cuts in December, the IMF said.
It estimates that the stimulus measures, which also include emergency unemployment benefits, will have a small impact on growth relative to fiscal costs.
The IMF also called for a US commitment to a medium-term debt target “as an anchor for fiscal policy”.
China is the biggest foreign holder of US Treasury with a portfolio of $1.15 trillion in January, according to US government data. Japan is the second-largest with $885.9 billion.
In Japan, where the government is planning additional spending for reconstruction after the March 11 earthquake and tsunami, the deficit is expected to reach 10 percent of GDP this year, the IMF said.
The country’s authorities will need to incorporate such costs into a medium-term fiscal adjustment plan “backed up by measures more clearly identified than in the past”, according to the IMF report.
A few days after Europe’s Greek-born debt crisis forced Portugal to seek financial aid from the European Union and the IMF, the fund said it is ‘essential’ for all advanced economies to start bringing their debt to “prudent levels” in the medium term.
It forecast that the average gross domestic debt ratio in advanced economies will breach 100 percent of GDP for the first time since the years after World War II. Debt will peak at 107 percent of GDP in 2016, 34 percentage points above levels before the global financial crisis, the report said.
The IMF estimates that financing needs in the richest nations will continue to rise this year after surging in 2010, and will remain high in 2012.
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