As debt ridden countries struggle to reduce their debt burdens, they are turning towards austerity measures. While this seems like a logical way to address the issue, the International Monetary Fund has warned countries that these measures could create serious problems for the global economy.
The IMF has joined forces with the World Bank, the World Trade Organization and nine other organizations have collaborated to address these issues. They have decided that they will create a call to action which will focus to protect the global economy.
The IMF and its allies are concerned about protecting the growth of the global economy and containing social unrest. IMF chief Christine Lagarde has stated that the world is increasingly concerned about rising unemployment. Lagarde and the leaders of the other world organizations are insisting that governments create new policies that will create jobs and promote economic stability for individuals among all classes in society. Addressing other key issues such as disparity of income is also key to keeping global citizens content.
Collectively, the 11 organizations have compiled a report that emphasizes the magnitude of the crisis facing the world. They clarified that the problems facing the world threaten the stability of the world and their ability to bring their societies together to promote global stability. They show greater concern over the economic developments in the Eurozone, which raise the threat of a global recession. They caution that austerity measures may not be an adequate means of addressing the Eurozone’s crisis.
Rising unemployment could create a number of potential social and economic consequences. These include nations placing more limitations on free trade, as they struggle to keep capital and jobs within their own countries.
Due to these concerns, the IMF, WTO, Financial Stability Board, World Health Organization, Organisation for Economic Co-operation and Development, African Development Bank, Asian Development Bank, Inter-American Development Bank, United Nations World Food Programme and International Labour Organisation have outlined the steps countries should take to resolve their crises. In their quest to address these challenges, the 11 organizations warned nations around the globe that they should implement austerity in a way that promotes growth rather than detracts from it.
Developed and developing nations are meeting in Mexico in June for the next G20 meeting. The IMF and the other organizations in the coalition believe that they should have a plan in place to address the economic problems and the need for austerity during that time.