International Monetary Fund (IMF) President George Eva (Kristalina Georgieva) warned on Friday that if the United States does not maintain financial support until the end of the new crown crisis, it may face a “dangerous wave” of bankruptcy and unemployment.
George Eva said that the United States, the world’s largest economy, has room for further action, and such actions can also bring positive spillover effects to the global economy.
When asked if she supports President Biden 1.9 trillionUSDDuring the rescue plan, George Eva stated that the IMF’s support for the plan focused on vaccines, medical care, support for the unemployed, and assistance to local governments.
She said that although the economic recovery has just started, the risks remain, especially if the support plan is not long enough.
“If the support cannot be sustained until we are out of the new crown crisis for a long time, I am afraid that a dangerous wave of bankruptcy and unemployment is about to come.”
She mentioned that the U.S. bankruptcy rate in 2020 is lower than normal because of financial support. Therefore, it is very important to continuously adjust this support in 2021 to prepare for the moment when some companies cannot survive.
“We want to see prudent and well-adjusted policy actions. We need to be positioned with policy support. Of course, we must also be very cautious and supervise so as not to get into trouble.
George Eva also acknowledged the possibility of overheating in the US economy, as the former Treasury Secretary Lawrence Summers warned, but she said that she believes that the new Treasury Secretary Janet Yellen will pay close attention to these risks.
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