DENVER (Reuters) - a senior official of the IMF warned Saturday that the U.S. must start on a path of deficit-cutting the budget relatively low or facing overwhelming debt rising interest rates.
"A time - wasting," John Lipsky, first Deputy Director General of the IMF International, said in a speech at the annual Conference of American Economics Association here. "It is essential to establish the basis for credible medium-term budgetary adjustment," he said.
Lipsky welcomed the measures recently by U.S. Governors of central banks and politicians in support of a weak economic recovery with monetary policy and fiscal expansionists. However, he said that these steps make it less likely that US can achieve goals to reduce its deficit in half by 2013.
Fiscal and monetary stimulus measures is controversial. The Federal Reserve in November sparked outrage with binding - plan buy $ 600 billion that national and international critics protested would weaken the dollar and lay the groundwork for a burst of inflation.
President Barack Obama and Congress agreed in December to a tax package 858 billion dollars to support economic growth, but quailed sound bond markets deepening budget deficits 1.3 trillion dollars.
Although short-term budgetary consolidation measures might affect economic growth and will be politically controversial long term they will be stronger growth, said Lipsky.
The risk is that if the US can not soon trim its deficit, doubts about America's financial position could push interest rates higher than longer term, he said.
U.S. legislators concerned about the deficit grow with spending cuts, but face opposition from other concerned listening exercise brake too early could delay the fragile economic recovery.
The Government debt crises that have recently introduced Ireland, Spain and the Portugal have raised concerns about the solvency of the greatest nations and led many to wonder how long the United States can support high levels of deficit.
While Republicans in the United States were the most vocal in calling for reductions in expenditures and rolled a rallying cry of deficit-cutting large gains in November's election, they have supported so far of the commitments to reduce spending.
Lipsky praised a proposal by a presidential commission for the United States to trim the deficit with a review of major tax code and deep spending cuts. While the plan was controversial, he collected more political than expected support.
However, the commission has always lacked sufficient support to the force of action of the Congress and there is little expectation that tax review will take place this year.
(Reporting by Mark Felsenthal.) (Editing by Leslie Adler)
No comments:
Post a Comment