Press Release No. 11/301

Press Release No. 11/301
August 2, 2011

Following the signing into law today of the agreement to raise the U.S. debt ceiling and reduce government spending, Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), made the following statement:

“We welcome the agreement to raise the U.S. government’s borrowing limit and cut the budget deficit. By reducing a major uncertainty in the markets and bolstering U.S. fiscal credibility, this agreement is good for both the U.S. and the global economy.

“Raising the debt ceiling means a severe economic disruption has been avoided, and the accompanying deficit reduction deal is an important step toward fiscal consolidation. Given the fragility of recovery, the planned spending cuts are appropriately phased and not overly frontloaded so as not to undermine growth.

“The challenge for policymakers is now to develop a consolidation framework that includes clear medium-term debt and deficit objectives. Putting public finances on a sustainable path will entail identifying further savings in entitlement spending as well as new revenues.”