IMF chief warns of 'very dark' 2009

Source: Agencies  |   2008-12-24  |     NEWSPAPER EDITION

INTERNATIONAL Monetary Fund chief Dominique Strauss-Kahn said a lack of fiscal stimulus by governments to tackle the global slowdown may make a bad 2009 even worse.

Strauss-Kahn told BBC radio that the IMF may need to cut its next economic growth forecasts, due in January, referring to "2009 as really being a bad year." "I'm specially concerned by the fact that our forecast, already very dark ... will be even darker if not enough fiscal stimulus is implemented," he said.

The IMF has called for fiscal stimulus - higher government spending and temporary tax cuts - worth US$1.20 trillion, or 2 percent of global annual economic output, to fill the gap caused by slumping private demand.

Britain has announced fiscal stimulus worth around 1 percent of output, and despite a "disturbing" level of public debt, Strauss-Kahn said more public borrowing would be the lesser of two evils. "The question of having social unrest has been highlighted... but it's only part of the problem," he said. "The problem is that the whole society is going to suffer."