Germany’s finance minister said Friday there is “no alternative” to cutting debt in European countries, the day after the IMF chief called for Greece to be given more time to pare its deficit.
“There’s no alternative to reduce in the medium term too high sovereign debts, especially, and of course for… the eurozone as a whole,” Wolfgang Schauble said in a debate with IMF Managing Director Christine Lagarde in Tokyo.
Lagarde on Thursday appeared to soften on the need for heavily-indebted countries to trim their fiscal cloth, when she said: “Instead of frontloading heavily it is sometimes better… to have a bit more time.”
She said the IMF was happy for debt-addled Greece to have another two years to get its fiscal house in order and bring budget deficits down to levels agreed with international creditors.
But in a debate on the sidelines of the International Monetary Fund’s annual meeting in Tokyo, which was briefly interrupted by an earthquake, Schauble cautioned against any slippage.
“I think it’s even more important for sustainable growth that investors and consumers have some confidence,” he said.
“We have to stick to what we announced and we have to implement it step by step.”
Lagarde, who earlier in the day said “wartime levels” of debt were the “greatest roadblock” to future growth, said her position had not changed, insisting debt-reduction was vital, but that it was a matter of timing.
“Consistently we’ve said the same thing: that adjustment… or fiscal consolidation… is necessary.
“But it’s a factor of pace. You know, at which pace does it happen?”
(source: AFP)
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