Washington, Oct 11 (EFE).- The International Monetary Fund (IMF) on Tuesday called on governments to cut their spending to help tackle a global inflationary spiral.
In its World Economic Outlook, the IMF thanked central banks around the world for focusing on restoring price stability and asked all countries to formulate the appropriate fiscal policy during this fight against inflation.
While the IMF urged policymakers to take measures in favor of the most vulnerable members of society impacted by the rising cost of living, it stressed governments’ duty to seek fiscal consolidation and reduce deficits to stop debts from continuing to rise.
“Without price stability, any gains from future growth are at risk of being eaten up by a renewed cost-of-living squeeze,” the report said.
“Taming inflation will come at a cost: unemployment will rise and wages will decline as monetary policy tightens,” it added.
Hence, the IMF believes that each country would have to make its own anti-inflation policies depending on its circumstances and the time it would take to end soaring inflation.
The monetary fund acknowledged the pressure many governments would suffer if they decided to raise the salaries of public sector employees above inflation.
“Without fiscal contraction elsewhere, and with tight supply, unfunded government spending increases or tax cuts will only push inflation up further and make monetary policymakers’ jobs harder,” the report explains.EFE