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IMF Urges Swift Action on US Debt Dispute

International Monetary Fund IMF Mission Chief Gian Maria Milesi-Ferretti (File Photo)
International Monetary Fund IMF Mission Chief Gian Maria Milesi-Ferretti (File Photo)

As U.S. lawmakers and President Barack Obama haggle over plans to cut Washington's massive debt, the International Monetary Fund says the United States must take urgent and effective action on the issue.

Monday, the newest IMF report on the U.S. economy said it is critical to the U.S. and other economies for Washington to promptly raise the legal limit on debt, while gradually cutting spending.

Leaders of the U.S. Senate and House of Representatives are working on competing plans to raise the federal debt limit and trim budget deficits. Congress and the White House failed to reach a bipartisan agreement Sunday, prompting declines on many stock markets Monday. Gold prices also hit a record high.

The leader of the majority party in the House, John Boehner, called on his fellow Republicans to support a short-term extension of the debt ceiling accompanied by a package of spending cuts. Boehner earlier said he was not sure a bipartisan deal could be reached.

Senate Majority Leader Harry Reid, a Democrat, wants a longer-term deal on the debt ceiling, while also cutting trillions of dollars in spending. President Barack Obama has said he wants an ambitious debt-reduction package.

August 2 is the deadline for raising the debt ceiling and allowing the federal government to continue to borrow money. The Obama administration and congressional leaders had hoped to announce a framework for an agreement before Asian financial markets opened Monday.