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US says stimulus should stay
By David Lawder |
June 15, 2009, Monday
|
Print Edition
Print Edition
UNITED States Treasury Secretary Timothy Geithner said last Saturday that it was too early to start withdrawing stimulus for the world's top economies, but governments should pledge a return to more sustainable fiscal policies in the future.
"Growth should remain the principal focus of policy among the G8 and broader G20 economies," Geithner told a news conference after finance ministers from the Group of Eight economies finished a two-day meeting in Lecce, Italy.
Geithner said recovery has not yet arrived, and there's a need to reinforce global demand.
"It is too early to shift toward policy restraint," Geithner said. "Economic and financial recovery will be stronger and more sustainable if we make clear how we get back to fiscal sustainability when the storm has fully passed."
For that reason, he said the US was committed to bringing down its fiscal deficits quickly to a sustainable level, starting in 2011, and would work to reduce long-term health care costs that are adding to deficits.
Geithner's remarks partly echoed the G8 finance ministers' statement issued after the meeting, which mentioned the need to prepare "exit strategies" for efforts to boost growth, and tasked the International Monetary Fund with analysis work to aid the process.
While Geithner said the "force of the economic storm is receding" he told the BBC in Lecce that he wanted recovery firmly in place before withdrawing the stimulus.
"We don't have a world economy that's growing anywhere close to potential yet. We want to see recovery firmly laid before we start to get on to the next challenge," he said.
Geithner's comments were his first at the meeting where differences were aired on the timing of stimulus exits and on tests to determine the health of banks.
"Growth should remain the principal focus of policy among the G8 and broader G20 economies," Geithner told a news conference after finance ministers from the Group of Eight economies finished a two-day meeting in Lecce, Italy.
Geithner said recovery has not yet arrived, and there's a need to reinforce global demand.
"It is too early to shift toward policy restraint," Geithner said. "Economic and financial recovery will be stronger and more sustainable if we make clear how we get back to fiscal sustainability when the storm has fully passed."
For that reason, he said the US was committed to bringing down its fiscal deficits quickly to a sustainable level, starting in 2011, and would work to reduce long-term health care costs that are adding to deficits.
Geithner's remarks partly echoed the G8 finance ministers' statement issued after the meeting, which mentioned the need to prepare "exit strategies" for efforts to boost growth, and tasked the International Monetary Fund with analysis work to aid the process.
While Geithner said the "force of the economic storm is receding" he told the BBC in Lecce that he wanted recovery firmly in place before withdrawing the stimulus.
"We don't have a world economy that's growing anywhere close to potential yet. We want to see recovery firmly laid before we start to get on to the next challenge," he said.
Geithner's comments were his first at the meeting where differences were aired on the timing of stimulus exits and on tests to determine the health of banks.
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