Dow Jones Newswires | High government debt levels around the world, but particularly in
advanced economies, could weight heavily on global economic growth, the
International Monetary Fund warned Friday.

In its Fiscal Monitor Report, the IMF said the potential growth may
decline by 0.5 percent a year based on current fiscal policies and the ratio of
debt to gross domestic product could rise 40 percent above pre-economic crisis
levels to 115 percent.

To stabilize the global economies, the fund said governments must carefully withdraw their stimulus measures and cut their debt levels to 60 percent of GDP by 2030. In advanced countries, that will require large retrenchment, slashing budgets and raising revenues.

For many of those countries, the IMF suggested targeting pensions and cost containment in health care and for countries facing large adjustment needs, increasing taxes.

Exacerbating the problem, the fund said that while global activity is rebounding faster than projected earlier, the fiscal outlook isn’t improving in tandem.