The International Monetary Fund (IMF) has urged Washington to both provide short-term support for the U.S. economic recovery and start to “decisively tackle” its larger fiscal challenges over the next few years.
The IMF, in recently releasing its annual assessment of the American economy, said the recovery “remains tepid” and subject to “downside risks” — notably those connected to uncertainty over Washington’s fiscal plans and Europe’s financial difficulties.
“The recession significantly worsened the state of U.S. public finances, which were already on an unsustainable path, and exposed vast gaps in the financial regulatory and supervisory frameworks, which reforms are gradually addressing,” the IMF said.
The OECD offered similar advice in its recent survey of the American economy: “Current legislation should be amended to avoid a sharp fiscal contraction in 2013, which would derail the recovery. Rather, fiscal consolidation should occur at a gradual pace, and should be implemented as part of a commitment to a medium-term framework to restore fiscal sustainability.”