IMF's Lagarde: Obama's jobs plan 'welcome,' but debt issues loom

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Following the lead of Federal Reserve Chairman Ben Bernanke, Lagarde warned that while debt levels must be addressed, policymakers must work to avoid dramatic cuts now, which could hinder economic growth. Rather, they need to lock in medium-term plans that will take effect when the economy is on sounder footing.

"Consolidating too quickly can hurt the recovery and worsen job prospects," she said. "So the challenge is to navigate between the twin perils of losing credibility and undermining growth."

Lagarde also said that America's problems are not just the high level of public debt, but private debt as well, as "overburdened" households struggle to dig out from obligations like mortgages and student loan debt.

In fact, she called on America to pursue "aggressive" efforts to relieve private debt, such as principal reduction programs or helping more homeowners refinance to take advantage of remarkably low interest rates.

The Obama administration is looking for ways to allow refinancings for more homeowners. The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, announced Friday it would be working to streamline refinancings on its end.

On a global scale, Lagarde called on governments to work together and decisively address the economic problems plaguing the world.

"This is no time for retreat, for half-measures or for muddling through," she said. "If we seize the moment, we can navigate our way out of this crisis and restore strong, sustainable and balanced global growth."