IMF Chief Warns About Far Reaching Effects of US Shutdown

The head of the International Monetary Fund, Christine Lagarde, has urged America’s warring politicians to settle their differences as she warned that an escalation of the budget row would harm the entire global economy.

Speaking ahead of the fund’s annual meeting in Washington next week, Lagarde said it was “mission critical” that Democrats and Republicans raise the US debt ceiling before the 17 October deadline.

Financial markets have started to take fright at the prospect that America could go into technical default as a result of the impasse in Washington and the IMF’s managing director said the dispute was a fresh setback for a global economy that would take at least a decade to recover from the slump of 2008-09.

“I have said many times before that the US needs to “slow down and hurry up” – by that I mean less fiscal adjustment today and more tomorrow,” Lagarde said. She added that the world’s biggest economy needed to put its finances in order, but favoured back-loaded measures to raise revenues and limit entitlement spending such as medicare that did not jeopardise short-term growth.

via The Guardian

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