IMF Calls US Budget Cuts Inappropriate

The U.S. federal budget cuts are an inappropriate measure that will weigh on potential growth, IMF chief Christine Lagarde said on Sunday, urging Washington to present “credible” fiscal plans.

Washington enacted across-the-board federal government spending cuts, known as sequestration, in March because Congress could not agree on an alternative.

It has meant everything from furloughs for air traffic controllers to fewer planes for the U.S. Navy to smaller subsidies for farmers.

“The budgetary procedure that is in place in the United States, which leads to a budgetary adjustment, seems to us absolutely inappropriate … because it blindly affects certain expenditures that are essential to support medium and long term growth,” Lagarde told an economists’ conference in Aix-en-Provence, southern France.

Her comments echoed those last month from the IMF itself, which said: “The deficit reduction in 2013 has been excessively rapid and ill-designed.”

via CNBC

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