The International Monetary Fund on Tuesday urged the United States to quickly remove the uncertainty over the path of fiscal policy, which is set to tighten abruptly at the start of next year absent congressional action.
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The U.S. economy is facing a so-called 'fiscal cliff' of $4 trillion in tax hikes and automatic government spending cuts that are due to kick in at the end of the year unless lawmakers act to delay or offset them.
"It is critical to remove the uncertainty created by the 'fiscal cliff' as well as promptly raise the debt ceiling, pursuing a pace of deficit reduction that does not sap the economic recovery," the IMF said in its annual health check of the U.S. economy.
The IMF said the U.S. recovery remained "tepid" and risks were elevated due to the euro zone crisis and uncertainty over domestic fiscal plans.
It forecast economic growth in the United States would reach 2 percent this year and cut its projections for 2013 to 2.25 percent from 2.4 percent.