IMF Says Budget Cutting Needs ‘Speed Limits’ Even Under Pressure
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Countries should observe “speed limits” and avoid narrowing fiscal deficits too quickly, even when they face pressure from investors justifying a large debt reduction, according to International Monetary Fund staff.
“As we have seen for some euro-area members, countries in a weak fiscal position that are facing market pressure or have lost market access have undertaken large and front-loaded adjustments,” according to a report by IMF economists released today. The research compiles lessons from the global financial crisis and the debt turmoil that followed in Europe.