IMF chief urges further debt reduction

AP News
Posted: Oct 30, 2012 3:37 PM
IMF chief urges further debt reduction

BERLIN (AP) — The head of the International Monetary Fund says the world's leading economies must continue to cut government spending despite an overall situation of only "tepid growth."

Christine Lagarde said Tuesday in Berlin that those governments "have to continue fiscal consolidation at a sensible pace" and implement the necessary structural reforms to improve their competitiveness.

Lagarde spoke in Berlin after holding talks with German Chancellor Angela Merkel and the heads of other global economic bodies such as the World Trade Organization, the Organization for Economic Cooperation and Development and the World Bank.

Lagarde acknowledged that there cannot be one timetable to reduce deficits that will fit all countries. But she said advanced economies "need to address the debt in the long term," to create the basis for new growth as the global economic recovery remains uncertain.

Merkel's talks with the IMF's Lagarde, the WTO's Pascal Lamy, the World Bank's Jim Yong Kim, the OECD's Angel Gurria and the International Labor Organization's Guy Ryder are part of regular consultations with these bodies.

The meeting took place amid worries that Europe's three-year-old debt crisis is weighing down global growth.

"We must regain credibility," the German leader said after the talks, vowing that the 17-nation currency zone will further strengthen its institutions to overcome the debt crisis.

Growth in the European Union, the world's largest economic bloc, has been stalling as many southern European nations are reducing spending simultaneously.

"The prospective for economic growth is not as big as we would wish," Merkel said, adding that Germany will seek to further strengthen domestic demand to boost Europe's economy as a whole.