PARIS (Bloomberg) The US and Japan must set out plans to reduce their budget deficits as the global economy expands, the Organisation for Economic Cooperation and Development said.The budgetary efforts needed to “merely stabilise debt are substantial for many countries,” OECD chief economist Pier Carlo Padoan wrote in the Paris-based organisation’s annual economic outlook published yesterday. “The United States and Japan, for which such requirements are the largest, have yet to produce credible medium term plans” and other countries need to specify how they’ll achieve their goals.The remarks underline growing concern about debt sustainability in developed countries even as the global economy expands in the wake of its worst recession since World War II. The OECD maintained its forecasts for the world economy to expand 4.2 percent this year and 4.6 percent in 2012, and raised them for US growth in 2011 even as it warned of stagflation in some economies.“The global recovery is becoming self-sustaining and more broad based,” Padoan said. Even so, he said spiralling deficits in the US and Japan and higher energy prices are among the threats to the recovery, while OECD Secretary General Angel Gurria said at the report’s presentation in Paris that downside risks “predominate”, including Europe’s sovereign-debt crisis.“A concern is that, if downside risks interact, their cumulative impact could weaken the recovery significantly, possibly triggering stagflationary developments in some advanced countries,” Padoan said.President Barack Obama’s administration is trying to reach an agreement with lawmakers on how to cut deficits over the long-term as part of a plan to raise the legal debt limit from its current level of $14.294 trillion. The Treasury predicts a deficit of 10.9 percent of gross domestic product for the year through September 30.“There is no consensus on fiscal-consolidation strategies, which casts doubt on the extent” to which any proposed deficit-cutting plan will be adopted, the OECD said. “Further progress to unwind fiscal imbalances beyond 2012 would require ambitious reforms of the tax system and entitlement spending,” similar to proposals by Obama’s National Commission on Fiscal Responsibility and Reform, it added.US government debt will rise to 101.1 percent of GDP by the end of the year and 107 percent in 2012, according to the OECD, which advises its 34 member governments on economic policy. The organisation raised its forecast for US growth to 2.6 percent in 2011 from 2.2 percent predicted in November, and left its expectations for 2012 growth unchanged at 3.1 percent.