WASHINGTON (Reuters) – The head of the International Monetary Fund warned on Friday that the United States could face a possible “dangerous wave” of bankruptcies and unemployment if it does not maintain fiscal support before the coronavirus crisis ends. .
The managing director of the IMF, Kristalina Georgieva, told reporters that the United States, the world’s largest economy, has the opportunity to take further action, and this will have positive consequences for the world economy.
Asked if she supports President Joe Biden’s $ 1.9 billion relief plan, Georgieva says the IMF supports the plan’s focus on vaccinations, health care, support for the unemployed and aid to state and local governments.
Despite the emerging recovery of the economy, Georgieva said risks remain, especially if support is not maintained long enough.
“There is still the danger that if support is not maintained until we have a long-term exit from the health crisis, there could be a dangerous wave of bankruptcies and unemployment,” she said.
In 2020, she said that in normal years, US bankruptcies were lower than average due to fiscal support, and that it is important to calibrate the support in 2021 while we prepare thoroughly for the moment that some businesses do not survive.
‘We want to see meticulous, well-calibrated policy action. We are eager for policy support to be there, ‘she said, adding: “Great care is needed so that we do not end up in a difficult situation. ‘
Georgieva acknowledged the concerns raised by former Treasury Secretary Lawrence Summers about a possible overheating of the US economy, but said she was confident that the new finance minister, Janet Yellen, would keep a close eye on the risks.
“Indeed, we need to be vigilant about the risks, but we have the best possible secretary of the Treasury for this potential risk,” she said. ‘And I am confident that a great deal of attention will be paid to forecasting and, if necessary, taking appropriate steps to address these risks. ”
Reporting by Andrea Shalal; Edited by David Gregorio