IMF chief warns of US fiscal cliff, urges action to avert crisis

Director of the International Monetary Fund (IMF) Christine Lagarde has warned that the looming “fiscal cliff” of tax hikes and budget cuts in the US will endanger American and global economic recovery.

Pleading with top US government and congressional officials to resolve their differences over the scheduled combination of major tax hikes and spending cuts that will go into effect in January 2013, the IMF chief insisted in a Friday interview with the BBC that America had a duty “to try to remove uncertainty and doubt as quickly as possible.”

Lagarde pointed to the claims about the US “leadership role” in the world and said the “uncertainty fuels doubt as to that leadership.”

The alarming remarks by the IMF’s managing director comes as US President Barack Obama and Congressional leaders from the rival Republican Party remain at odds over ways to avoid the so-called fiscal cliff.

While Obama has insisted on a tax increase for wealthy Americans, Republican lawmakers, led by Speaker of the House John Boehner, have objected, urging bigger government spending cuts instead.

Moreover on Friday, Boehner alleged that the US president was adopting a “my way or the highway” approach and engaging in “reckless talk” about going over the fiscal cliff.

“This isn’t a progress report because there is no progress to report,” Boehner emphasized in a press briefing at Capitol Hill.

“The president has adopted a deliberate strategy to slow walk our economy right to the edge of the fiscal cliff,” he added.