EconomyNorth America

IMF chief urges US to address fiscal cliff

IMF chief Christine Lagarde has called on the United States to move quickly and resolve the looming “fiscal cliff” facing its economy, no matter who will be elected as the country’s next president.

Speaking at the end of a two-day meeting of G20 finance ministers and central bank chiefs in Mexico City, Lagarde said the US government needs to solve its debt woes or risk slamming the brakes on global growth, AFP reported on Monday.

The fiscal cliff refers to a variety of tax increases and spending cuts that are set to kick in from January 1 unless Republicans and Democrats can come together with an alternative budget plan. Economists warn that such a shock could send the economy back into recession.

Lagarde said there were “clearly factors of uncertainty not only for the US economy, but also for the global economy, given the size of the US economy.”

“Whoever is going to be elected or re-elected tomorrow will be faced with that challenge,” the IMF managing director said.

In October, Lagarde said public debt in developed countries stood at “wartime levels,” leaving governments at the mercy of the markets.

At the meeting in Mexico City, finance chiefs of the world’s leading economies also urged the United States to take decisive action to resolve its fiscal challenges.

“It’s not that we can demand anything from the United States … before the election. We want them mainly to acknowledge that there is a problem that has to be dealt with,” said a high-ranking European official.

Back to top button