State debt 'biggest problem' - IMF chief

IMF chief Dominique Strauss-Kahn said yesterday that state debt will be the "biggest problem" for the world economy in coming years and some countries will need seven years to fix their finances.

"The fiscal sustainability problem is going to be one of the biggest, maybe the biggest problem for the coming... several years," Strauss-Kahn told the World Economic Forum in Davos.

"We'll have to deal with this for five, six or seven years, depending on the country," he said.

Strauss-Kahn's comments came as worries over Greece's debt woes clouded the Davos forum, where Greek Prime Minister George Papandreou has been trying to reassure markets that his country will act to beat its debt crisis.

Many other developed countries also have major budget deficits as they pump in extraordinary sums to stimulate their economies during the global slowdown.