13 October 2012

Reuters: Finance leaders back EU, US to-do list to shield growth

IMF chief Christine Lagarde said nations had narrowed their differences over how to implement policy, seeking to downplay disagreements between the Fund and Germany over how quickly debt-laden countries such as Greece should cut budgets.

The IMF's governing panel, representing the 188 member countries, praised steps that had already been taken, particularly in Europe, to make the world financial system safer, even if they had not yet gone far enough.

Spain's economy minister, Luis de Guindos, said he felt the mood towards his country lifting too. Spain is under pressure to seek a bailout as it struggles to cope with high government debt and the cost of recapitalising its banks.

Reports from the IMF this week downgraded global economic growth forecasts for the second time since April and warned of the need for action in advanced economies to treat a debt hangover that stems in part from earlier efforts to quell the global financial crisis.

Lagarde said there were "one or two countries" that had not finalised the reforms, which were agreed in 2010, a thinly-veiled reference to the United States. The Obama administration does not want to seek congressional approval for more IMF funding before the November presidential election.

European leaders argued this week they had taken big strides towards building a stronger fiscal and banking union, and they earned at least some recognition from the rest of the world. "This broad framework offers a more promising strategy for addressing the crisis", US Treasury Secretary Timothy Geithner said. "However, what is important is how it will be applied." German Finance Minister Wolfgang Schäuble pointed out that eurozone decision-making does take time, given the number of national governments involved.

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