IMF slams US, Japan, Brazil economies

The International Monetary Fund (IMF) warns the world’s largest economies over failing to secure fiscal measures to reduce their countries’ deficits.

The IMF has criticized the US tax-cut and spending package passed by Congress in December, while also faulting Japan and Brazil for spending increases.

In contrast, the IMF noted progress in European countries that have implemented austerity measures. It named Germany, France, Spain and Britain as leaders in reducing their budget deficits, AFP stated.

In its “Fiscal Monitor” report, the IMF said that the US budgetary measures would slightly increase its deficit, being the highest among the G20 countries.

The US Congressional Budget Office reported that the country’s budget deficit for this year stands at a record $1.5 trillion.

The IMF’s criticism followed a downgraded credit rating for Japan by Standard & Poor’s, which accused Tokyo of not having a long-term plan to cut its deficit, Reuters reported.

“In advanced economies where fiscal sustainability has not been a market concern, credible plans going well beyond 2011 need to be put in place urgently to lock in benevolent market sentiment,” the IMF said.

The IMF praised European countries for their tough spending cuts, saying that the largest European economies are, “projected to further improve their fiscal positions in 2012.”

“Withdrawal of fiscal stimulus in Germany and France, combined with discretionary measures and higher growth, will contribute to a notably lower deficit,” the IMF said.

“Spain’s deficit reduction will be the most pronounced among the large European countries.”

The body warned that countries must implement deficit-cutting plans or risk the debt crisis that Greece and Ireland have faced.