State debt will be biggest global worry

IMF Chief Dominique Strauss-Kahn said state debt will become the world's biggest economic problem and some countries will need seven years to fix their finances.

"The fiscal sustainability problem is going to be one of the biggest, maybe the biggest problem for the coming... several years," Strauss-Kahn said.

"We'll have to deal with this for five, six or seven years, depending on the country," he said.

The United States and many other developed countries also have major budget deficits as they pump in extraordinary sums to stimulate their economies during the global slowdown.

As the global economy begins to recover, the debate has turned from how much stimulus to inject to when to end pump priming, particularly since the cash measures have increased deficits.

He said even if continuing stimulus packages could exacerbate debt, the risk of ending them too early was greater.

"The only reason of a double dip could appear would be that the exit after the stimulus would be too early.

"In this case, frankly I don't know what we can do," he said.

 

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