TOKYO, Feb 9, 2008 (AFP) – The head of the IMF on Saturday renewed his call for countries to consider fiscal measures to boost demand in the face of slowing economic growth caused by the US subprime loan crisis. International Monetary Fund director general Dominique Strauss-Kahn also urged the world’s financial authorities to work together closely on efforts to shore up the global economy and financial markets.
Monetary policy and coordination between central banks must be “the first line of defence” against economic problems, he told reporters on the sidelines of a meeting of Group of Seven finance ministers here.
Countries should also consider coordinating on their fiscal policy, he said.
“If we are talking about globalisation, if we are talking about more and more coordinated monetary policy, then at the same time we have to think about something which could look like (a) more coordinated fiscal response,” he said.
The US government has prepared a 150-billion-dollar package to stimulate its flagging economy, while the Federal Reserve has slashed interest rates several times since last September.
But other G7 nations have shown less appetite for fiscal measures to boost domestic demand, par