Fiscal cliff: US must do more, says IMF

The International Monetary Fund has said that US actions to avoid the fiscal cliff did not go far enough to address the country's long-term fiscal deficit and debt problems.

The global emergency lender cheered the political deal finalised late Tuesday in Washington that allowed the country to avoid severe spending cuts and tax hikes programmed to take place, AFP reported.

"In the absence of Congressional action the economic recovery would have been derailed," IMF spokesman Gerry Rice said in a statement.

But, he added, the Congress made little progress on dealing with the larger-picture problem of the US deficit, and the need to increase the country's statutory debt ceiling in order to keep funding that deficit.

"More remains to be done to put US public finances back on a sustainable path without harming the still fragile recovery," Rice said in a statement.

"Specifically, a comprehensive plan that ensures both higher revenues and containment of entitlement spending over the medium term should be approved as soon as possible."

Additionally, he said, "it is crucial to raise the debt ceiling expeditiously and remove remaining uncertainties about the spending sequester and expiring appropriation bills."

In the last-minute compromise between Democrats and Republicans, automatic tax increases slated to hit January 1 were pared back.

But scheduled steep federal spending cuts, called the sequester, were put off for two months, meaning Congress will have to go through another battle over how to deal with them, in addition to long-term deficit reduction measures.

Ratings agency Moody's echoed the IMF's concerns in a statement on Wednesday night.

"[The deal] does not provide a basis for a meaningful improvement in the government's debt ratios over the medium term," Moody's said.