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IMF Chief Warns US on Debt Limit

Service : Economy
TEHRAN, July 11 (ICANA) – The new head of the International Monetary Fund (IMF) says that a US debt default would jeopardize and destabilize global economy, though she added that she could not imagine US officials letting that happen.
Monday, July 11, 2011 11:39:41 AM
IMF Chief Warns US on Debt Limit

Christine Lagarde warned that a US debt default “would be a real shock, and it would be bad news for the US economy”, so she expressed hope “that there is enough bipartisan intelligence and understanding of the challenge that is ahead of the United States, but also of the rest of the world.”

Should the US lawmakers fail to reach a compromise by the August 2 deadline, there could be “real nasty consequences”, she stressed, such as rising interest rates, depressed stock markets, increased unemployment, and decreased investment.

“I can't imagine for a second that the United States would default,” Lagarde told the ABC News in an interview. “But, clearly, this issue of the debt ceiling has to be resolved.”

She stated that a potential debt default would have repercussions beyond the US, adding, “"It would certainly jeopardize the stability, but not just the stability of the US economy it would jeopardize the stability at large."

The US congressmen have currently locked horns over the raising of the debt ceiling. While the Democrats are calling for an increase in tax revenue and an end to the tax cuts made in the Bush era for the wealthier Americans, the Republicans are against any tax increase and advocate a reduction of civil services such as Social Security and Medicare.

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