The International Monetary Fund shaved projections for global economic growth this year and next to take into account sharp government spending cuts.

While the MFI said economic prospects had improved in recent months with a fading of financial risks, it warned Europe against relaxing efforts to combat its debt crisis given the messy bailout in Cyprus.

“Global economic prospects have improved again but the road to recovery in the advanced economies will remain bumpy,” the IMF said in its periodic World Economic Outlook.