The world economy needs to balance austerity with growth if it is to recover properly from the global financial crisis, a key IMF committee said in Tokyo on Saturday.
“Fiscal policy should be appropriately calibrated to be as growth-friendly as possible,” the International Monetary and Financial Committee said in a communique.
The statement came after days of back and forth between those — led by Germany — urging no let-up from belt-tightening and those arguing for a loosening of the grip of austerity.
International Monetary Fund Managing Director Christine Lagarde said on Thursday she was happy for Greece — struggling under the weight of cuts demanded by international creditors — to have two more years to meet its deficit reduction targets.
But on Friday Germany’s finance minister Wolfgang Schaeuble said there was “no alternative” to cutting bloated national balance sheets.
Fiscal policy should be 'growth friendly': IMF body
