By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) have named Euro Area and Spain as countries newly identified given relatively large fiscal and external imbalances that are likely to persist or emerge over the medium term in the wake of the crisis.
This is contained in an update of Staff Sustainability Assessments for G-20 Mutual Assessment Process (MAP) obtained by InvestAdvocate.
According to the report, specifically, IMF staff projections envisage continued high (or rising) public debt and sharply rising external surpluses in these economies relative to the indicative guidelines.
Other countries identified with relatively large imbalances in 2013 on the basis of G-20 indicative guidelines are China, France, Germany, India, Japan, the United Kingdom and the United States were identified as having relatively large internal or external balances over the medium term based on staff projections.
Euro Area and Spain added to this list makes it nine (9) countries that have relatively large economic imbalances.
“For the seven members previously selected in 2011, essentially the same imbalances were identified again in 2013,†the IMF staff report said.
The report said external imbalances have generally decreased and the improvements are partly permanent, partly transitory, while fiscal imbalances are slowly improving as well.
According to the IMF, in both cases however, more needs to be done to reduce imbalances while strengthening growth prospects.
The staff report affirmed that external imbalances have decreased noticeably since the crisis compared to 2011 projections and imbalances in major G-20 economies have narrowed more than expected in 2011–13.
Overall, the analysis suggests that further policy action across the G-20 membership, tailored for deficit and surplus economies, is needed to facilitate further internal and external rebalancing to support stronger growth.
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