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New York - A US default or significant credit downgrade would be a “very, very serious event”, Christine Lagarde, the new head of the International Monetary Fund (IMF), said on Tuesday.
Lagarde, who began her job as IMF managing director in July, warned that the consequences of such events would be far-reaching and would not stop at US borders.
“The clock is ticking and clearly the issue needs to be resolved immediately,” Lagarde told the Council on Foreign Relations think tank, according to a text of her remarks.
Lawmakers in Washington edged closer to a US default on Tuesday as Republicans and Democrats were deadlocked over competing plans to narrow the country’s deficit and raise its debt ceiling by an August 2 deadline.
Market uncertainty over the Greece rescue plan reflects the complexity of the deal and the fact that work is left to be done, Lagarde said.
European Union leaders and banks agreed last week to a rescue deal that offers Greece more cash and easier loan terms to keep it afloat and avoid further contagion.
Lagarde also said the IMF may need additional resources to give it the leverage to help countries facing balance of payments issues.
“In the not too distant future we will probably have to visit this issue,” Lagarde said.
Lagarde, who began her job as IMF managing director in July, warned that the consequences of such events would be far-reaching and would not stop at US borders.
“The clock is ticking and clearly the issue needs to be resolved immediately,” Lagarde told the Council on Foreign Relations think tank, according to a text of her remarks.
Lawmakers in Washington edged closer to a US default on Tuesday as Republicans and Democrats were deadlocked over competing plans to narrow the country’s deficit and raise its debt ceiling by an August 2 deadline.
Market uncertainty over the Greece rescue plan reflects the complexity of the deal and the fact that work is left to be done, Lagarde said.
European Union leaders and banks agreed last week to a rescue deal that offers Greece more cash and easier loan terms to keep it afloat and avoid further contagion.
Lagarde also said the IMF may need additional resources to give it the leverage to help countries facing balance of payments issues.
“In the not too distant future we will probably have to visit this issue,” Lagarde said.
