IMF warns UK as debt reaches 100 per cent of GDP
20 Jul 2009
The International Monetary Fund has issued a stern warning to the UK Government to seriously address its debt problem and not test the markets patience, even as national debt begins to touch 100 per cent of GDP.
IMF mission chief to the UK, Ajai Chopra, has said that with liabilities reaching 100 per cent GDP, the UK Government would now find it harder to raise money in the capital markets.
According to Chopra, ''The liabilities in the UK are quite sizable and both the Government bond market and the foreign exchange market conditions currently suggest that the UK is being given the benefit of the doubt, but this benefit of doubt will not last forever.''
Chopra said that instead of testing the limits of the market's confidence, the UK Government ought to be working on reducing national debt in earnest. ''Policies will have to focus on being consistent and concentrating on the downside risks, in order to make sure that market confidence is maintained,'' he said.
His reminder to the UK Government follows that of the Bank of England governor, Mervyn King, who has also asked the Government to speed up its debt repayment plans.
Chopra said that authorities would have to move more aggressively in their fiscal consolidation plans rather than at the pace laid out in the 2009 budget.