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US President Barack Obama speaks during the Winning the Future Forum on Small Business in Cleveland, Ohio, February 22, 2011.JIM WATSON

The United States is putting the global recovery at risk by refusing to take its swollen budget deficit more seriously, the International Monetary Fund says in a newly released report on the world economy.

In a report for the Group of 20 economic powers, the IMF says President Barack Obama likely will fail to deliver on his promise to cut the U.S. budget deficit in half by 2013, a pledge he made along with other advanced economies at the G20 summit in Toronto last June.

The U.S. is facing a budget deficit equivalent to almost 11 per cent of its gross domestic product in 2011, the widest in the G20, the IMF says in the report, which was given to G20 finance ministers and central bank governors last weekend in Paris and released publicly Wednesday.

Mr. Obama last week submitted a budget proposal to Congress that proposes measures that would reduce the U.S. deficit by $1.1-trillion (U.S.) over a decade, compared with the $4-trillion in new taxes and spending cuts recommended by the President's own fiscal commission. The public debt of the United States would remain little changed under the White House plan because Mr. Obama shied away from doing anything about increasingly expensive programs such as Medicare and Social Security.

While Mr. Obama's fiscal plan has come under heavy scrutiny at home, the IMF's report is among the first to place the U.S. budget in the context of the international effort to smooth global imbalances - the mismatch between high levels of debt in advanced economies and excessive saving in emerging economies. The IMF's assessment is clear: The world's biggest economy - so far, at least - is letting its allies down.

"Achieving the Toronto commitment of halving the deficit by 2013 appears highly unlikely, requiring a very large adjustment - roughly 5 percentage points of GDP in primary structural terms," the report says. "Meanwhile, a continued absence of credible medium term fiscal strategy threatens to eventually drive up U.S. interest rates, disrupt financial markets and adversely affect global prospects."

The U.S. wasn't the only country singled out for criticism by the IMF. The fund, which in the past has been castigated for going too easy on its biggest members, also singled out Europe, Japan and China for rebuke.

European finance ministers were told at the G20 meeting that they are doing too little to shore up confidence in European banks, and that their dithering on a final solution for the euro zone's sovereign debt crisis risks another financial crisis.

Japan, where the budget deficit is 9.1 per cent GDP, is doing too little to avoid a debt crisis of its own, the IMF said, noting that the Japanese government has promised to narrow its fiscal shortfall by a mere 1 per cent of GDP in 2012.

China, the world's second-largest economy, continues to maintain policies that keep its currency "substantially undervalued," forcing neighbouring countries in Asia to follow, feeding inflation pressures throughout the region.

The IMF also made specific mention of China's property markets, which the fund described as an "emerging risk to the global recovery."

Residential prices in China's biggest cities have risen rapidly since the financial crisis, spurred initially by stimulus measures that loosened home lending, and more recently by "strong income growth, high savings and limited alternative investment vehicles," the IMF says.

Chinese authorities have in the past year taken steps to restrain real estate prices, putting pressure on the government to ensure the bubble deflates slowly. "While it is difficult to predict how significant the stress from potential property price correction would be, if these risks are realized, there could potentially be global ramifications," the IMF report says.

The global economy is actually growing somewhat faster than the IMF previously predicted. Still, growth is too slow in advanced economies such as the U.S. and Canada to lower elevated unemployment rates. In emerging markets such as China and Brazil, economic growth is so strong that inflationary pressures are building, and there "are emerging signs of overheating in some economies," the fund says.

Inflation is especially obvious in commodities. The IMF revealed in the report that it has raised its forecast for the average price of oil in 2011 to $94.75 a barrel from its previous estimate of $89.50, made only a few weeks ago when the fund released its latest global economic outlook. While social unrest in the Middle East is creating uncertainty in commodity markets, the fund says in the report that the primary reason for the revision is strong demand.

To ease inflationary pressures, China and similar countries should allow the value of their currencies to rise, which would cool industrial activity and make imports cheaper, the IMF says.

In the U.S. and Japan, the time has come for governments to show they are serious about their constraining their debts, the IMF says. Both countries recently announced additional stimulus measures, even though their economies appeared to be growing. "Given recent stimulus measures, the United States and Japan need to strengthen their adjustment credentials by specifying the measure they intend to adopt to honour their commitments to reduce deficits and debt," the IMF says.