(photo credit: REUTERS)
Strong words from the International Monetary Fund as global financial
leaders prepare to head to Washington for meetings this weekend.
The IMF has issued a warning to European leaders -
saying the euro zone is dragging its feet when it comes to stopping the
IMF Chief Economist Olivier Blanchard said, "I think we are very explicit in our messages, both in
the EU and elsewhere, in saying that Europe must get its act together.
That they met in July and took a number of decisions, as to, for example
the role of the EFSF (European Financial Stability Facility) and it is
absolutely essential that they do what's needed so that this is
operational very soon. It is indeed a major source of worry so you can
see us, as indeed, issuing a call to arms."
The IMF's concerns about Europe follow up a downgrade
of Italian debt by ratings agency Standard & Poor's late Monday. The
downgrade adds additional stress by raising borrowing costs for weaker
members of the Euro zone.
But the IMF is not worried about Europe alone, in fact,
in an update to its World Economic Outlook, the international lender
warned Europe and the US could slip back into recession.