IMF says U.S. should hike debt limit to avert global shock

WASHINGTON (Reuters) - Failure by U.S. lawmakers to agree soon on a deal to raise the government's borrowing limit could deliver a "severe shock" to a still-fragile recovery and global markets, the International Monetary Fund warned on Wednesday.

In an annual review of U.S. economic conditions, the IMF said the key challenge the country faces is finding a way to stabilize its debts by mid-decade without derailing growth, which is likely to remain modest for some time.

"And of course, the federal debt ceiling should be raised expeditiously to avoid a severe shock to the economy and world financial markets," the IMF said in a statement. (Reporting by Glenn Somerville, editing by Neil Stempleman)