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France, Italy and Germany hampering Euro growth: IMF
Washington, Oct 30: The IMF said yesterday that the Euro zone`s stability and growth pact is being undermined by France, Germany and Italy, and downgraded its growth forecast for the 12-nation area to 0.75 percent from 0.9 percent.
Washington, Oct 30: The IMF said yesterday that the Euro
zone's stability and growth pact is being undermined by
France, Germany and Italy, and downgraded its growth forecast
for the 12-nation area to 0.75 percent from 0.9 percent.
The International Monetary Fund feels the pact "is being
wrongly undermined by inadequate policies in the three largest
countries," Michael Deppler, IMF Director for the Euro area,
told a news conference.
The IMF now forecasts 0.75 percent GDP growth this year for the zone, down from the 0.9 percent projected in the September World Economic Outlook. For 2003, the Gross Domestic Product forecast was lowered to 2.0 percent from 2.3 percent in September. "The core of the problem is the three largest countries haven't lived up to the rules" on budget discipline, Deppler said. IMF Executive Directors called in a statement for a "concerted and credible commitment" by France, Germany and Italy to cut their budgets by 0.5 percentage points a year over the next several years in order to reach "close to" balanced budgets.
The IMF also called for the European Central Bank to ease its interest rate policy because of looming risks. "We don't see a very robust recovery in prospect," Deppler said.
The 1997 accord which underpins the European single currency, obliges the 12 Euro-zone members to hold public deficits to less than three percent of Gross Domestic Product and to strive for balanced public finances.
France, Germany, Italy and Portugal are struggling to meet the deficit requirement. Others could follow, experts have warned.
Bureau Report
The IMF now forecasts 0.75 percent GDP growth this year for the zone, down from the 0.9 percent projected in the September World Economic Outlook. For 2003, the Gross Domestic Product forecast was lowered to 2.0 percent from 2.3 percent in September. "The core of the problem is the three largest countries haven't lived up to the rules" on budget discipline, Deppler said. IMF Executive Directors called in a statement for a "concerted and credible commitment" by France, Germany and Italy to cut their budgets by 0.5 percentage points a year over the next several years in order to reach "close to" balanced budgets.
The IMF also called for the European Central Bank to ease its interest rate policy because of looming risks. "We don't see a very robust recovery in prospect," Deppler said.
The 1997 accord which underpins the European single currency, obliges the 12 Euro-zone members to hold public deficits to less than three percent of Gross Domestic Product and to strive for balanced public finances.
France, Germany, Italy and Portugal are struggling to meet the deficit requirement. Others could follow, experts have warned.
Bureau Report