Interest rates must be raised to rein in debt -IMF

Published: 03 Nov 2009 17:42:08 PST

WASHINGTON, Nov 3 - Global interest rates will need to rise by up to 2 percentage points to rein in increasing debt levels in major advanced economies, the International Monetary Fund said on Tuesday.

In a new report the IMF said government debt in the major economies is projected to reach 118 percent of gross domestic product in 2014.

The IMF said it expects major emerging market countries, which are leading the global economic recovery, to tighten fiscal policies starting next year. In advanced economies, where the recovery is still too fragile, fiscal policies should remain supportive and governments should avoid a premature withdrawal of fiscal stimulus, the Fund added.