US deficit can't go on - IMF chief

[FaGal]

US deficit can't go on - IMF chief
www.rte.ie - February 24, 2005


IMF managing director Rodrigo Rato has said a current account deficit the size of the US's 'cannot be sustained indefinitely'.

He told a meeting in New York that current account deficits in themselves were not undesirable, but an unsustainable deficit was undesirable.

Record levels of debt are now financed by foreign investors, the IMF boss said.

'It is highly unlikely that such easy credit will continue to be available to the US on the basis of the existing policy path. There can be little doubt that the pattern of persistent and growing US current account deficits, and the increase in dollar indebtedness that they entail, have contributed to the recent renewed depreciation of the dollar,' he said.

Mr Rato said the dollar's fall should serve as a wake-up call for policymakers to take immediate action to tackle the problem of imbalances in the world economy.