At the end of the recent IMF meetings, Singapore’s finance minister Tharman Shanmugaratnam warned that the US and Europe should both be prepared for several more years of economic turmoil.
As chair of the International Monetary Fund’s governing body, Shanmugaratnam explained that he has finally begun to feel that political leaders understand the enormity of the situation, including the rampant government debt and public expectations.
“There have been very strong expectations set for more of the same, and it is going to take political courage to shift gears,” he said. He continued, explaining that some of the necessary changes include reducing government spending, transforming labor laws and befits as well as numerous other political steps.
He added that without the shift, none of the struggles will be resolved in the near future.
“It’s going to be a long journey,” he said. “If we don’t get back to real growth, fiscal sustainability is not possible.”
Christine Lagarde, IMF managing director, also showed a wary approach to the upcoming months, having added another $430 billion to the fund in case the global economy worsens. This budget is not aimed at the Eurozone, however, and according to Lagarde will be loaned only under the usual conditions.
“It’s nice to have a big umbrella,” she said.
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