IMF: Public Debt Increased So Serious Challenges
Managing Director of the International Monetary Fund (IMF) Dominique Strauss-Kahn warned the public debt the developed countries will increase significantly. This fact will be a major challenge for developed countries.
“This increase will be a major challenge for countries to reduce debt to below the level before the crisis. This should be done immediately so that there is enough space to anticipate future crisis, “Strauss-Kahn said in a conference at Cambridge University told Reuters on Sunday (11.4.2010).
He estimates the developed world debt will rise 35% or 110% of gross domestic product (GDP) in 2014. “So for one to two decades, the focus should be to reduce public debt financing than increasing spending or cutting taxes,” he explained.
Strauss-Kahn’s speech interrupted by anti-IMF protest caused. One protester climbed in altar where Strauss-Kahn made a speech and held a banner that reads “The IMF is part of the problem, not a solution,” he said.
But Strauss-Kahn to stay motivated. He said the world’s intergovernmental policy coordination should be done. This is to secure economic growth.
“I’ve said this before, in the context of Europe, where policy coordination frameworks such as monetary, fiscal, financial and structural issues needed to boost economic growth. Coordination is also needed on a global scale, to develop a balanced and sustainable growth, “he said.
Meanwhile, AFP reported, Strauss-Kahn explains the higher inflation target could provide a space for rising interest rates. This strategy can be used to anticipate the threat of recession due to deflation. “I value this great idea that should be discussed seriously. But this is not a major issue and should not divert our attention on more important issues, “he said.
He also said that the global economy approaching toward recovery. “While it is still slow and uneven (recovery) and requires supporting policies of sustainability in many developed countries. In addition, the cost of this crisis – low growth, high unemployment and public debt sharply higher – will take years to overcome, “he said