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US urges a global economic fix

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The US’s share of this expanded rescue fund would be an extra $100 billion. The cash is used for loans, not direct grants, but increasing the US’s commitment to the IMF could be tough to sell to Congress at a time when the bill for domestic aid already boggles many lawmakers’ minds.
The intent of increasing the IMF’s lending power is to help stabilize emerging markets and developing nations that can’t afford big stimulus packages.

“We do desperately need to get the IMF additional resources as soon as possible,” says Ralph Bryant, a senior fellow and specialist in the global economy at the Brookings Institution in Washington.

More world stimulus

The second major item on the US agenda for the global finance meetings is an attempt to cajole other developed nations into spending more to stimulate economic demand in their own countries.

The United States’ recently passed stimulus bill amounts to about 5.5 percent of the nation’s gross domestic product. US officials want the rest of the world to pump up domestic spending with stimulus packages of at least 2 percent of their own GDPs.

An IMF report released last week held that only the US, Saudi Arabia, China, Spain, and Australia have hit the 2 percent stimulus goal. Germany, by way of contrast, has pumped about 1.5 percent of its GDP into the domestic market via new government spending. The French stimulus equals about 0.75 percent of GDP.

Furthermore, the US wants the IMF to continue to produce an international stimulus report card, by issuing data quarterly on country efforts scaled against GDP.

“We believe it is important for [nations with the world’s largest economies] to commit to substantial and sustained actions for a period that matches the likely duration of the crisis,” said Geithner on March 11.

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