Balanced growth is central economic challenge, says IMF chief
Japan Herald Monday 7th May, 2012
• IMF chief says steep cuts tend to slow an economy, particularly if a nation is already suffering from weak growth
• If growth is worse than expected, countries should stick to announced fiscal measures, says Lagarde
• IMF chief was speaking a day after voters in France and Greece rejected governments for pursuing austerity measures including cuts in social spending
WASHINGTON - Christine Lagarde, managing director of the International Monetary Fund Monday Monday urged indebted countries to remain on course to maintain a balance between need to reduce budget deficits and giving growth a push to avoid further damaging their economies.
In an address entitled "Anchoring Stability to Sustain Higher and Better Growth" delivered in Zurich, the IMF chief said that steep cuts tend to slow an economy, particularly if a nation is already suffering from weak growth.
"Countries need to keep a steady hand on the wheel. This means that if growth is worse than expected, they should stick to announced fiscal measures, rather than announced fiscal targets. In other words, they should not fight any fall in tax revenues or rise in spending that comes about solely because the economy weaken," Lagarde stated.
Restoring solid, sustained and balanced growth is the central economic challenge facing the world today, said Lagarde, emphasizing the importance of well paced, country-specific credible fiscal adjustment combined with reforms aimed at increasing growth and jobs.
Speaking a day after voters in France and Greece rejected governments for pursuing austerity measures including cuts in social spending, Lagarde said, "There's no avoiding this brake of fiscal adjustment.
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