In itthe international organization considers it “imperative” to avoid fiscal austerity and calls on governments to continue spending to boost growth and prevent the most vulnerable from suffering unnecessarily.
“This is not the time to think short-term or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could leave the Sustainable Development Goals out of reach,” United Nations Secretary General António said in the text. Guterres.
According to the UN, the current situation It demands prioritizing public spending and promoting a large stimulus package that facilitates recovery after the covid-19 crisis and makes it possible to generate the necessary transformations from the economic and environmental point of view.
The recommendations of the United Nations clash, at least in part, with those of the International Monetary Fund (IMF), which is insisting to different countries on the importance of preparing fiscal consolidation measures.
“The diversity of opinion is good. We qualify a little more,” said the person in charge of the UN report, Hamid Rashid, who made it clear that each country needs different recipes, but who insisted on the idea that a Well-targeted public spending can help especially in the current situation.
“Our message to the global community at this time is to avoid fiscal austerity,” Rashid said, pointing to the weak economic growth that is expected. “This is not the time to cut public spending,” he insisted.
In the context of high inflation, The United Nations defends that there are investments that do not contribute to price rises and that, on the contrary, can help combat this problem in the longer termgiving as an example the US Inflation Reduction Act, which includes million-dollar aid and subsidies for investments in the country.
Excess interest rate hike
Meanwhile, the organization stressed the risk posed by a possible excessive rise in interest rates at a time when most central banks are raising the price of money to try to cool the economy and thus curb inflation.
“While containing inflation remains a key near-term objective, policymakers must also consider the sacrifices in slower growth, job losses and international effects”the report states.
According to the UN, there is a significant risk that the monetary adjustment will be excessive and that this will damage the economy, which is why it defends that there should be a debate on the inflation targets of central banks.
In any case, the organization points out that inflation seems to have already peaked in the most advanced economies and that this should allow the rate rise to be stopped, especially in the United States, where the Federal Reserve (Fed) has acted very aggressively. and this has had certain negative effects in other regions, especially in developing countries.
Source: Ambito
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