Countries need to do more to improve their finances than just stabilize their deficits and debt, the IMF warned on Tuesday, saying one-third of leading economies face major fiscal problems. In a new assessment of global fiscal challenges, the International Monetary Fund warned countries that just closing deficits to stabilize debt loads courted more trouble down the road. "Thanks to steady consolidation following the peak of the crisis in 2009, many advanced economies are now close to achieving primary surpluses that will allow them to stabilize their debt ratios," the IMF said in its Fiscal Monitor report. However, "high debt -- even if stable -- retards potential growth, constrains the scope for future discretionary policy, and leaves economies exposed to further market shocks," it said. "Merely stabilizing advanced economy debt at current levels would be detrimental to medium- and longer-term economic prospects." The IMF said one-third of advanced economies, which represent 40 percent of global gross domestic product (GDP), "still face major challenges." The Fund warned against a country trying to inflate its way out of its debt problems, using rising prices to reduce the value of its debt. Nor, in most cases, can privatization of government assets contribute enough to the effort. As hard as it is for many countries to get their budgets into the black, "there are no alternative quick fixes." It warned that current low interest rates were unlikely to be maintained in the medium term, and that markets might not always look favourably on the most powerful economies, like Japan and the United States, if their debt levels remain high. The global debt problem is mainly located in developed economies. The world ratio of gross debt to GDP is 79.3 percent and for advanced economies it is 109.3 percent. Japan faces the largest burden among advanced economies, with debt at 245 percent of GDP projected this year. Behind Japan are Greece, 180 percent; Italy, 131 percent; Ireland and Portugal both around 122 percent; and the world's largest economy, the United States, at 108 percent. Despite efforts in many countries to crunch their budgets to reduce deficits, the Fund foresees continued deterioration in debt ratios through 2014, before they head lower. "Many advanced economies face a lengthy, difficult, and uncertain path to fiscal sustainability." The Fund stressed the need for "clear and credible" medium-term debt reduction programs rather than harsh short-term austerity drives, to avoid setting back growth while the economies remain weak. "The continued absence of such plans in Japan and the United States remains a significant concern, particularly given the introduction of new short-term stimulus in Japan (even though temporary) and insufficient progress on measures to restore medium-term fiscal sustainability, including entitlement reform, in the United States." In the United States, a coherent medium-term plan could substitute for the current "sequester" program to slash spending over the next 10 years, which the IMF said was already reducing the country's growth potential.