Smart fiscal policy needed to tackle unemployment amid slow recovery: IMF

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Xinhua, Washington :
An International Monetary Fund (IMF) official Sunday called for smart fiscal policy to create jobs amid slow global economic recovery and high public debt levels.
Six years after the global financial crisis, unemployment remains at quite significant levels around the world, Vitor Gaspar, director of IMF Fiscal Affairs Department, told Xinhua on the sidelines of the Annual Meetings of the IMF and the World Bank.
“Employment is very much at the top of the global policy agenda,” Gaspar said. “We have about 200 million unemployment people worldwide.”
He said the most dramatic is probably the trend of youth unemployment.
In some advanced European countries, the unemployment rate among young people exceeds 50 percent; in many developing economies, the challenge is to be able to create enough jobs to absorb a very large number of young people entering the job market every year, he said.
Acknowledging this immense challenge, the IMF’s latest Fiscal Monitor report released Wednesday shifted focus to jobs with the theme “Back to work: how fiscal policy can help.”
This was the first Fiscal Monitor report since Gaspar, a former Portuguese finance minister, joined the IMF in early June. While fiscal policy cannot substitute for comprehensive reform, it can work in tandem with broader structural reform efforts to support job creation, said the report, which is published twice a year to track public finance around the world.
The report also said the average debt-to-GDP ratio in advanced economies is still expected to exceed 100 percent at the end of the decade, though fiscal efforts in the last five years have stabilized that ratio.
“Given the challenges associated with this weakening recovery, the possibility of lower potential growth going forward, and very low inflationary rates in some regions of the world, in order to ensure reducing public debt-to-GDP ratio to safer levels, we need smart fiscal policy,” Gaspar said.

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