IMF chief applauds Obama deficit plan

IMF managing director Dominique Strauss-Kahn praised US President Barack Obama’s deficit plan © AFP/File Mandel Ngan

AFP

WASHINGTON (AFP) – The head of the International Monetary Fund on Thursday applauded US President Barack Obama’s ambitious plan to slash the US government’s huge deficit and debt burden.

IMF managing director Dominique Strauss-Kahn called the need for advanced countries to get fiscal policies on a sustainable path “a real concern.”

“The recent declarations by President Obama are very welcome; (he) goes clearly in that direction,” Strauss-Kahn said at a news conference.

On Wednesday Obama unveiled his plan for a combination of tax hikes and spending cuts to reduce the US budget deficit by $4 trillion over 12 years in a major policy speech.

Strauss-Kahn, presiding over the annual spring IMF-World Bank meetings in Washington this week, warned however that fiscal adjustments need to be undertaken carefully so as not to undermine the fragile recovery in economic growth in developed countries.

On Monday the IMF urged the United States to begin reducing its huge budget deficit this year and to not put off the painful adjustment, forecasting that the country’s debt will hit 10.8 percent of GDP this year, one of the highest among developed nations.

“A credible strategy to stabilize public debt in the medium term, and a down payment on fiscal consolidation in 2011, are urgently needed,” the IMF said in its spring report on the global economy.

© AFP — Published at Activist Post with license