Sunday

19th Nov 2017

Schaeuble rebukes IMF boss on eurozone debt

International Monetary Fund (IMF) boss Christine Lagarde and German finance minister Wolfgang Schaeuble went on collision course on Thursday (11 October) on the subject of eurozone debt and deficits.

Speaking at TV debate in the IMF's annual meeting in Tokyo, Lagarde said that countries should not be obliged to keep to ambitious deficit reduction targets if their economies remained stagnant, adding that higher public spending and tax cuts could be used as stimulus measures.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

Schaeuble hit back, saying Lagarde is contradicting the IMF's stance on austerity.

The fund had warned "time and again" that Western economies needed to prioritise debt reduction, he said.

"When there is a certain medium-term goal, it doesn't build confidence if one starts going in a different direction," he added.

The IMF chief at a separate press conference earlier in the day had struck a different tone, describing runaway government debt levels as the greatest problem facing western economies, commenting that they are at "wartime levels." 

"Without growth, the future of the global economy is in jeopardy, and perhaps the greatest roadblock will be the huge legacy of public debt," she had said.

Meanwhile, in another move likely to rile Berlin, Lagarde indicated the Fund is prepared to give debt-ridden Greece an extra two years to push through deficit reduction plans aimed at bringing the country's debt mountain, which currently stands at around 160 per cent of GDP, under control.

"Sometimes it is better to have more time," she said.

Berlin is coming under increasing pressure to take a more flexible approach to bailouts as the eurozone's economic woes deepen.

Earlier this week the IMF cut its growth projections for the eurozone, which it said would expand by 0.2 per cent in 2013. It also confirmed that the 17 eurozone economies would contract by 0.4 per cent in 2012.

The economic pain remains most acute in the five EU countries receiving emergency funding, with Greece, Portugal and Spain in particular difficulty.

The eurozone debt crisis will again take centre stage at next week's EU summit in Brussels when EU leaders try to flesh out plans for a growth and jobs pact agreed at the June summit.

Eurozone gives Greece 10-day ultimatum

Eurozone ministers have given Greece 10 days to implement budget cuts in return for a bailout cash, as Germany Merkel braves protesters on a visit to Athens.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

MEPs ponder how to fight tax havens

After the Paradise Papers brought new revelations about tax dodging across the globe, including in the EU, the European Parliament wonders how to step up the fight.

News in Brief

  1. Bonn climate talks extend into Friday evening
  2. UK needs to move on Brexit by early December, Tusk says
  3. Puigdemont extradition decision postponed to December
  4. Ireland wants written UK guarantees to avoid hard border
  5. US did not obstruct climate talks, says German minister
  6. EU signs social declaration
  7. Puigdemont to be heard by Belgian judges
  8. Steep fall in migrants reaching EU

Stakeholders' Highlights

  1. European Jewish CongressAntisemitism in Europe Today: Is It Still a Threat to Free and Open Society?
  2. Counter BalanceNew Report: Juncker Plan Backs Billions in Fossil Fuels and Carbon-Heavy Infrastructure
  3. Nordic Council of MinistersNordic countries prioritise fossil fuel subsidy reform
  4. Mission of China to the EUNew era for China brings new opportunities to all
  5. ACCASmall and Medium Sized Practices Must 'Offer the Whole Package'
  6. UNICEFAhead of the African Union - EU Summit, Survey Highlights Impact of Conflict on Education
  7. Nordic Council of MinistersNordic Council Calls for Closer Co-Operation on Foreign Policy
  8. Swedish EnterprisesTrilogue Negotiations - Striking the Balance Between Transparency and Efficiency
  9. Access EuropeProspects for US-EU Relations Under the Trump Administration - 28 November 2017
  10. World Vision20 November: Exchange of Views at the EP on Children Affected by the Syria Crisis
  11. Nordic Council of MinistersSustainable Growth the Nordic Way: Climate Solutions for a Sustainable Future
  12. EU2017EEHow Data Fuels Estonia's Economy

Latest News

  1. EU keeps former Soviet states at arm's length
  2. EU leaders make pledge on social issues after populist backlash
  3. EU agencies and eastern neighbours This WEEK
  4. Germany slams Dutch call for more ambitious EU climate goal
  5. Mind the gap: inequality in our cities
  6. Climate activists 'disappointed' with EU at climate talks
  7. Davis outlines UK vision on Brexit in Berlin
  8. German coalition talks in near collapse