IMF: Sovereign debt challenge broader than in euro area
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Xinhua, July 7, 2011
The sovereign debt challenge, now the top priority for many advanced economies to tackle, is broader than in the euro area, said Christine Lagarde, the newly- appointed managing director of the International Monetary Fund ( IMF) on Wednesday.
"The issue is broader than in euro zone," Lagarde said at her first press conference as the new head of the 187-member international financial institution, citing that the debt crisis in Europe, particular in Greece is "immediate" and "pressing".
Her comment came at a critical moment when Europe is on the verge of another round of sovereign debt crisis. Rating agency Moody's on Tuesday downgraded Portugal's debt to "junk" level.
Moody's warned that Lisbon could not meet the reform requirements of its first 78-billion-euro (112 billion U.S. dollars) IMF-European Union bailout and would need a second rescue package.
Meanwhile, Greek fiscal condition remains in danger. The European Union and the IMF are in intensive talks about the rescue plan.
Lagarde, the former French finance minister, had played a key role in the 110-billion-euro IMF-EU rescue of Greece, which includes, tentatively, a restructuring of its debt held by banks.
Ireland, the other euro zone country to have received a bailout, said on Tuesday it may have to make additional spending cuts next year to meet deficit reduction targets in its 85 billion euro bailout plan due to economic slowdown.
These European countries' fiscal deterioration could come to test the IMF's commitment to eurozone stability.
"Those issues can not wait," said Largarde. "A lot should be done by economy players."
She noted that debt issue is a wide challenge for many other advanced economies, including the United States, which is also at the risk of default if the country could not lift its borrowing limit in time.
On June 28, the IMF Executive Board declared to pick Lagarde, 55, as the IMF's 11th managing director for a five-year term starting July 5, making her the first woman to lead the global lender.
Lagarde was until recently France's finance minister, a post she held since June 2007. Previously, she served as trade minister for two years. She started her political career as an anti-trust and labor lawyer.
