THE IMF in its Fiscal Monitor Update report, has advised governments to avoid responding to any unexpected downturn in growth by going overboard in tightening policies and should instead let automatic stabilizers to come into action as long as financing is available and sustainability concerns permit. Experts have suggested that though adjustments are essential but it should take place at a pace that can support output and employment.

According to the Fiscal Affairs Department ,some countries like the US and Japan should define their medium -term debt reduction strategies.While deficits and debt in many advanced economies are high, the pace of consolidation predicted in 2012 is considerable, keeping in the view the current economic environment. The report states that while smaller deficits and debt ratios do lead to lower borrowing costs, advanced economies with faster output growth are also currently benefiting from lower spreads.