"The US needs to take urgent action to address short-term fiscal uncertainties. The euro area should build on progress toward banking union and further reduce financial market fragmentation," the International Monetary and Financial Committee said in a communique issued at the end of its 28th meeting.
"Japan should implement medium-term fiscal consolidation, and structural reforms to invigorate growth," it said.
A communique issued yesterday after the G-20 Finance Ministers and Central Bank Governors meeting, which among others was attended by Finance Minister P Chidambaram, had also said that the US needs to take urgent action to address short-term fiscal uncertainties.
Noting that the global recovery is continuing, the IMF said growth remains subdued and downside risks persist, with some new risks emerging.
"There are encouraging signs of improving activity in advanced economies, while growth in many emerging market economies has moderated. Growth has generally remained resilient in low-income countries," the IMF communique said.
"We will build on recent progress and implement more ambitious and coherent policies for strong, sustainable, and balanced growth, while reducing market volatility," it said.
The IMF said that reducing market volatility requires carefully managing multiple transitions, including a shift in growth dynamics, normalising global financial conditions, achieving fiscal sustainability, a re-balancing of global demand and moving to a more stable global financial system, the communique said.
On advanced economy, the IMF said, recovery in the US has gained ground, stimulus measures have induced a recovery in Japan, the euro area is emerging from recession, and in some other advanced economies including the UK growth is already picking up.
Accommodative monetary policies have helped support global growth while maintaining stable prices, and remain appropriate, and should be accompanied by credible fiscal policies and further financial sector and structural reforms, it noted.
Growth in emerging market economies, the IMF said, continues to account for the bulk of global growth, but has moderated, in a few cases to a more sustainable level.
Fundamentals and policy frameworks are generally stronger, but domestic structural challenges remain, the communique said.
Recent volatility in capital flows and financial markets has created new challenges in some countries.
Macroeconomic policies, including exchange rate policies, need to be sound, the IMF said.
Observing that fiscal consolidation remains a high priority in countries with large fiscal imbalances, while others should rebuild buffers unless growth deteriorates significantly, the IMF said, policies to address structural obstacles and enhance productivity are an ongoing effort toward strong, sustainable and balanced growth.
Noting that global imbalances have declined for both structural and cyclical reasons but re-balancing remains a key priority, the IMF said, looking forward, policies in many countries will need to play a larger role in sustaining adjustment.
Deficit countries should continue to raise national saving and competitiveness, while surplus countries need to boost domestic sources of growth, it said.