IMF chief Christine Lagarde today urged the United States to quickly resolve a political stalemate over raising the debt ceiling, warning that failure to reach an agreement would have serious consequences for the world economy.
“The clock is ticking and clearly the issue needs to be resolved immediately,” she told the Council on Foreign Relations according to a text of her remarks.
Ms Lagarde, who has been in the job for less than a month, called on the United States to develop a credible fiscal adjustment plan but cautioned against being too hasty.
“The United States could face another jobless recovery. That is why we’ve advised against fiscal consolidation that is unduly hasty – even as we stress the importance of getting a fiscal consolidation plan agreed soon,” she said.
Her warning on the dangers of not raising the $14.3 trillion debt ceiling by August 2nd came as the dollar fell across the board after US president Barack Obama gave no sign of a breakthrough in deadlocked talks in a televised speech late last night.
The US faces a technical default on some of its government bonds outstanding unless it raises the debt limit.
