The United States’ national debt will soon reach 100 percent of gross domestic product, the International Monetary Fund predicts in a new report.
The sharp rise in U.S. debt started in 2006 and by 2015, the IMF suggests, debt could reach more than 100 percent of GDP.
At the end of first quarter of 2010, the gross debt was 87.3 percent of GDP, of which about 56 percent was held by the public, and about 44 percent was intragovernmental, U.S. officials have said.
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The IMF predicts that the U.S. would need to reduce its structural deficit by the equivalent of 12 percent of GDP, a much larger portion than any other country analyzed except Japan.
Greece, in the midst of a financial crisis, needs to reduce its structural deficit by just 9 percent of GDP, according to the IMF's analysis.
The IMF also encouraged rich countries including the U.K. to eliminate value- added-tax loopholes to help cut their budget deficits, the Financial Times reported.
The IMF said the United Kingdom could raise an amount equivalent to 3.3 percent of GDP, or a third of its estimated deficit, by removing exemptions and improving collection of the sales tax, according to Bloomberg. As the global economy recovers, governments’ fiscal balances are on average continuing to deteriorate, the IMF said.
Meanwhile, the IMF also waded into the debate over healthcare reform, questioning the CBO's analysis that healthcare reform would reduce the U.S. deficit, according to thehill.com.
"There are some risks to the CBO estimates, however, including that the substantial decrease in Medicare payment rates to healthcare providers may prove difficult to implement," the report reads.
President Barack Obama has established a fiscal commission to make recommendations on addressing the nation's fiscal woes.
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