Spain must do more to reduce deficits, IMF says

WASHINGTON (AP) ? The International Monetary Fund says Spain's budget deficit is likely to be bigger than estimated and implored the government to take bolder steps to reduce its debt.

The international lending group says Spain should consider raising more tax revenue to reduce its deficit, in addition to cutting spending. At the same time, the government shouldn't reduce its budget gap too quickly, given its weak economy, the IMF said. It should focus on improvement over the medium term.

Spain has made progress on its budget deficit and recapitalizing banks, but investor confidence remains weak, the IMF says. That's driving up the country's borrowing costs.

The IMF's report paints a bleak picture of Spain's economy. Spain is in an "an unprecedented double-dip recession with unemployment already high," the report says.

Associated Press

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