Clock is ticking for solutions to global debt, warns IMF boss
CHRISTINE Lagarde, the new head of the International Monetary Fund (IMF), urged US policy makers to quickly agree on a fiscal plan and avoid default, while warning Europeans they are also under pressure to implement their own measures to alleviate the debt crisis.
"They don't have the luxury of time, there is an expectation that things now have to happen and have to be delivered," the former French finance minister said of her fellow Europeans.
In the US "the clock is irredeemably ticking and people have to try to find the appropriate solution," she said.
Sovereign debt was one of three major challenges to the world economy cited by Ms Lagarde, along with growth and social instability.
Speaking three weeks after starting as the IMF managing director, Ms Lagarde said "there is still a level of uncertainty" in markets about last week's attempt to solve the debt crisis. That's because the agreement is "complicated" and because "there is still work to be done".
"What from the IMF point of view remains to be done is clearly implementation" by Greece of measures attached to a first €110bn package, while governments which signed off on the new rescue plan last week must act as well, she said in her speech at the Council on Foreign Relations, a non-partisan research organisation and publisher.
A default or a significant downgrade of US sovereign debt by credit agencies would be "a very, very, very serious event" for the US as well as for the global economy, she warned.
Lagarde (55) hinted she may seek more money for the IMF. The decision by the group of 20 nations in 2009 to triple IMF resources "was exactly the right move," she said. "The question is, do we still have the level of resources that is now needed and appropriate to address the crises?" she asked.
She said this issue would be revisited "in the not-so- distant future".