Euro Leaders May Need to Ease Deficit Plans, IMF’s Shafik Says

European authorities should consider relaxing fiscal consolidation targets for some euro-area countries as they may exacerbate economic slumps and undermine public support, International Monetary Fund Deputy Managing Director Nemat Shafik said.

“Fiscal adjustment plans for this year are broadly appropriate in Europe,” Shafik said in prepared remarks for a speech at the Brussels Economic Forum in the Belgium capital today. “In a few euro-area countries, however, the nominal fiscal targets for 2013 agreed before the current slowdown in growth may prove too pro-cyclical and may need to be adjusted or at least expressed in structural terms.”