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IMF Warns Wealthy Nations on Debt

A top official at the International Monetary Fund (IMF) says wealthy countries will need to start cutting spending and deal with huge national debts next year.

John Lipsky, the first deputy managing director of the IMF, said in a speech in China Sunday that stimulus spending remains appropriate in 2010 to push the global economic recovery. But he says wealthy nations must cut spending, increase taxes and reform pensions and health entitlements to reduce debt in 2011.

Lipsky says cutting stimulus measures put in place during the economic crisis will not be enough, because the stimulus programs account for only about one percent of rich countries' gross domestic products.

He estimated that government debt will be higher than annual GDP in most advanced economies by 2014, the highest debt-to-GDP ratio since the years after World War II.

Some information for this report was provided by AP, AFP and Reuters.