Arab Today, arab today imf tight budget less crucial with interest rates low
Last Updated : GMT 06:53:52
Arab Today, arab today
Arab Today, arab today

IMF: Tight budget less crucial with interest rates low

Arab Today, arab today

Arab Today, arab today IMF: Tight budget less crucial with interest rates low

Washington - AFP

Austerity budgets and public spending cuts are less critical toeconomic health as interest rates in the major advanced economies remainhistorically low, the International Monetary Fund said Thursday.The IMF traditionally calls on its member nations, especially those receiving itsfinancial support like Greece and Portugal, to rein in spending to reduce theirbudget deficits and public debt.But the persistence of unusually low interest rates in the major economies haspushed the global lender into questioning -- at least on the margins-itsdoctrine,according to an analytical chapter of its World Economic Outlook report releasedahead of next week's IMF/World Bank spring annual meetings.Market rates paid by nations to finance themselves "have declined substantially"since the 1980s and now are even in "slightly negative territory" when taking intoaccount inflation, the 188-nation IMFsaid.Worldwide, the IMF said, the "10-year global real interest rates," a weighted average,has fallen from 5.5 percent in the 1980s, to 3.5 percent in the 1990s, to 2.0 percentbetween 2001 and 2008, and to slightly below zero in 2012.The downward rates trend accelerated during the 2008-2009 global financial crisis,which drove the major central banks, like the Federal Reserve and the EuropeanCentral Bank, to lower their key rates to near zero to support their faltering economies.According to the IMF, this trend should continue, notably because of investors'growing appetite for government debt, considered a safe investment."Real interest rates and the cost of capital are likely to rise only modestly fromcurrent levels," the report said.In this scenario, states could choose to borrow to finance new spending withoutfurther deteriorating their finances because the cost of capital would be essentiallyzero, or even negative given inflation."Some increases in debt-financed government spending, especially publicinvestment, may not increase public debt in the medium term," said the IMF, basedon its expectation that interest rates will remain lower than economic growth for aprolonged period of time.However, it warned that low interest rates pose potential risks to financial stabilityby encouraging investors to seek higher yields by taking on more risk.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today imf tight budget less crucial with interest rates low Arab Today, arab today imf tight budget less crucial with interest rates low

 



Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today imf tight budget less crucial with interest rates low Arab Today, arab today imf tight budget less crucial with interest rates low

 



Arab Today, arab today France defies terrorism through tourism

GMT 15:18 2017 Saturday ,20 May

France defies terrorism through tourism
Arab Today, arab today Zainab Fadel Oglu designs “Shakerin” mosque

GMT 12:13 2017 Thursday ,11 May

Zainab Fadel Oglu designs “Shakerin” mosque
Arab Today, arab today Seeks to move past rift with Israel

GMT 08:00 2017 Monday ,08 May

Seeks to move past rift with Israel
View News in Arabic - Business: قضايا ساخنة
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday