IMF MD: Global recession can be avoided with right fiscal policies

Georgieva and Saudi Finance Minister Mohammed Bin Abdullah Al-Jadaan at the conference on food security in Riyadh, Saudi Arabia on Monday, Oct 3. – Reuterspix: Global recession can be avoided if governments’ fiscal policies were consistent with monetary policy tightening, but likely there would be countries falling into recession next year, the International Monetary Fund's managing director said on Monday .

She said fiscal policies that indiscriminately support everybody by suppressing energy prices and providing subsidies are working against monetary policies’ purposes. Earlier Monday, a United Nations agency warned of the serious consequences of a monetary policy-induced global recession for developing countries. It called for a new strategy, including corporate windfall taxes, supply-side efforts and regulation on commodity speculation.

“We are likely to see ... unemployment going up and that will be the time for the Fed has to say we have done our job. We can ease in the future. We are not there yet.” She highlighted the IMF's mission in Malawi, saying the country may enter into a full IMF loan agreement after receiving emergency financing.

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