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Inadequate Actions to Relieve Budget Deficits Could Undermine Global Recovery- World Finance Leaders

The United States was castigated by world finance leaders on Saturday because of its inadequate actions to lessen its large budget deficits. Finance leaders said monetary constraints in rich countries such as the United States can largely jeopardize global recovery.

On Saturday, finance ministries were in Washington for its semi-annual meeting. This time, they have discussed more about the $14 trillion debt accumulated by the United States.

Most of the emerging market economies, which took part in the meeting, criticized the actions of the United States. However, some advanced nations reinforced the talks as well.

According to Dutch finance minister Jan Kees de Jager, if advanced nations act too slowly to reduce massive financial deficits, this could further lead to more sustainability issues and weaken the outlook of global economy. He said debt dynamics in other advanced economies together with the United States are of major concern.

The International Monetary Fund said that the U.S. budget deficit was about to reach 10.8 percent of the nation’s economic output this year. The federal country ties with Ireland for the highest deficit-to-GDP ration among several other advanced economies.

The committee’s advisory panel on Saturday said that concerns for financial stability, as well as sovereign debt stability must be addressed. It said credible actions must be made to push progress.

The House of Representatives, led by the Republican party, approved a plan on Friday to cut spending by about $6 trillion over a decade and slash benefits for the poor and elderly.

President Barach Obama, who offered plans to reduce deficits by $4 trillion over 12 years, said on Thursday that the plan of the Republicans would just create a nation of potholes. The administration is worried about cutting budget spending sharply while economic recovery remains volatile.

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Afghan Government Impose Taxes on US Contractors

The Afghan government has forced taxes on U.S. contractors appointed in the country, threatening new conflicts with the United States, the Washington Post reported.

The newspaper stressed, while citing unnamed Afghan and US officials, that taxation of US government assistance is banned by US law, as well as by a number of bilateral agreements between Afghanistan and United States.

However, the report said contractors have lately received tax bills for work done under the US government programs.

Reconstruction is a key component in an anti-rebellion effort led by the United States, which aims to even out the volatile south and east of Afghanistan as part of helping Afghan farmers and improving local government.

US Vice President Joe Biden pointed out on his second day surprise visit tn the war-torn nation last week that his country’s troops could remain after 2014 if Afghans want them to.

Around 97,000 troops from the United States are serving in Afghanistan as part of an international force of some 140,000.

The contractors have made an appeal to the Defense and State Departments to clarify the matter and according to the Washington Post, they have been told to ignore the bills and stand up for their rights.

However, the paper reported that Afghan government has already began sending overdue tax bills and has threatened some US companies with possible arrest, loss of licenses and confiscation of aid goods.

Afghan Finance Minister Omar Zakhilwal informed The Post through a text message that whatever is not exempted by law and treaties will not be exempted and that Afghanistan is serious against tax evasion.

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