IMF: 'Critical' for US to raise $14.3T debt limit

It is "critical" that the United States get its debt levels under control for the good of its own economy and others, the International Monetary Fund (IMF) said Monday.

In a new report, the IMF also said it was urgent that the government raise the debt limit, while agreeing on a medium-term plan to reduce the deficit that includes entitlement reform and revenue increases.

In fact, any deficit-reduction plan must begin in fiscal 2012, lest the U.S. government face a "disruptive loss in fiscal credibility." The IMF touted administration proposals on the deficit, such as an automatic trigger for spending cuts or revenue increases if Congress does not get the debt under control.

But while it is important for the U.S. to begin getting its deficit under control, it is an even more immediate priority to raise the debt limit, according to the IMF. A failure to do so could cause a "severe shock to the U.S. economy and world financial markets."

The IMF said later in the report that not raising the $14.3 trillion debt limit would "have disastrous consequences for the U.S. and global economy."

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