A senior IMF official urged countries to use tax and spending policies to combat the global financial crisis because lowering interest rates may not be enough.
"In the current environment, there is a risk that monetary policy will prove to be less effective than in past episodes," IMF first deputy managing director John Lipsky said in a speech on Wednesday in Washington. "We are advising our members to consider whether they have room to adopt temporary fiscal measures."
The call to boost government spending is a departure from the IMF's long-held stance in favor of fiscal restraint. Lipsky said the crisis that began in US mortgage lending has grown into "a global challenge" that threatens "sustained and stable global growth."
Lipsky said in a speech at the Peterson Institute that the risks of a further escalation were rising and "decisive" policies would be required to stabilize the economy.
"We are using our expertise and many years of experience in helping our member countries through crises to think about what policies might prove most effective," he said.
Policy makers, Lipsky said, need to "think the unthinkable" and consider how they would react should the financial system deteriorate further.
Lipsky said an IMF assessment indicates that major and emerging economies accounting for half of the global economy have the ability to implement fiscal stimulus measures to boost domestic demand.
The IMF has already given its approval to Asian nations' efforts to employ fiscal measures to boost growth.
Manila may discard plans to balance its budget this year as Philippine President Gloria Arroyo's government accelerates investment in public works and social services.
Thailand's government is spending 1.5 trillion baht (US$47 billion) to expand mass transportation and improve health care. Hong Kong is cutting taxes and Singapore is handing out cash to its citizens.
In an effort to spur demand, US President George W. Bush and congressional leaders agreed last month on a US$168 billion stimulus plan that has as its centerpiece tax rebates for most households. Taxpayers are expected to start receiving checks in May.
In addition, US House Financial Services Committee Chairman Barney Frank said he would introduce legislation this week to expand the government's role in preventing foreclosures.
Super Typhoon Kong-rey is the largest cyclone to impact Taiwan in 27 years, the Central Weather Administration (CWA) said today. Kong-rey’s radius of maximum wind (RMW) — the distance between the center of a cyclone and its band of strongest winds — has expanded to 320km, CWA forecaster Chang Chun-yao (張竣堯) said. The last time a typhoon of comparable strength with an RMW larger than 300km made landfall in Taiwan was Typhoon Herb in 1996, he said. Herb made landfall between Keelung and Suao (蘇澳) in Yilan County with an RMW of 350km, Chang said. The weather station in Alishan (阿里山) recorded 1.09m of
STORM’S PATH: Kong-Rey could be the first typhoon to make landfall in Taiwan in November since Gilda in 1967. Taitung-Green Island ferry services have been halted Tropical Storm Kong-rey is forecast to strengthen into a typhoon early today and could make landfall in Taitung County between late Thursday and early Friday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, Kong-Rey was 1,030km east-southeast of Oluanpi (鵝鑾鼻), the nation’s southernmost point, and was moving west at 7kph. The tropical storm was packing maximum sustained winds of 101kph, with gusts of up to 126 kph, CWA data showed. After landing in Taitung, the eye of the storm is forecast to move into the Taiwan Strait through central Taiwan on Friday morning, the agency said. With the storm moving
NO WORK, CLASS: President William Lai urged people in the eastern, southern and northern parts of the country to be on alert, with Typhoon Kong-rey approaching Typhoon Kong-rey is expected to make landfall on Taiwan’s east coast today, with work and classes canceled nationwide. Packing gusts of nearly 300kph, the storm yesterday intensified into a typhoon and was expected to gain even more strength before hitting Taitung County, the US Navy’s Joint Typhoon Warning Center said. The storm is forecast to cross Taiwan’s south, enter the Taiwan Strait and head toward China, the Central Weather Administration (CWA) said. The CWA labeled the storm a “strong typhoon,” the most powerful on its scale. Up to 1.2m of rainfall was expected in mountainous areas of eastern Taiwan and destructive winds are likely
The Central Weather Administration (CWA) yesterday at 5:30pm issued a sea warning for Typhoon Kong-rey as the storm drew closer to the east coast. As of 8pm yesterday, the storm was 670km southeast of Oluanpi (鵝鑾鼻) and traveling northwest at 12kph to 16kph. It was packing maximum sustained winds of 162kph and gusts of up to 198kph, the CWA said. A land warning might be issued this morning for the storm, which is expected to have the strongest impact on Taiwan from tonight to early Friday morning, the agency said. Orchid Island (Lanyu, 蘭嶼) and Green Island (綠島) canceled classes and work
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