3 Jan 2013

Cliff deal not enough - IMF

1:59 pm on 3 January 2013

The International Monetary Fund says the fiscal cliff deal in Washington does not go far enough.

Both the Senate and the House of Representatives on Tuesday passed legislation to defer federal spending cuts worth $US109 billion and tax rises worth $US600 billion that were due to begin on 1 January.

IMF external relations director Gerry Rice said the economic recovery would have been derailed in the absence of Congressional action.

"However, more remains to be done to put US public finances back on a sustainable path without harming the still fragile recovery,'' he said.

''Specifically, a comprehensive plan that ensures both higher revenues and containment of entitlement spending over the medium term should be approved as soon as possible.

''In addition, it is crucial to raise the debt ceiling expeditiously and remove remaining uncertainties about the spending sequester and expiring appropriation bills."

Further negotiations over spending cuts and the government debt ceiling are to be held over the next two months. The federal debt ceiling is expected to be reached by the end of February.