Chairman of the International Monetary Fund's steering committee and the Deputy Prime Minister of Singapore, Tharman Shanmugaratnam, has said that there is clearly room to improve in the US, assessing the political paralysis over the budget and debt ceiling.
"It is a sort of question that requires a grading from an elementary school teacher rather than a graduate school professor. And, I think there is clearly room for improvement," Shanmugaratnam told reporters at the end of the annual plenary meeting of the IMF here.
The top IMF official acknowledged the negative impact on the global economy if the current US debt and budget crisis remains unresolved.
"I think it is a clear negative. There is a clear negative when we think about the key element of recovery that has to take place in the next one to two years, the recovery of private investment. Private investment hinges on confidence," he said.
"If we don't get clear resolution on the US fiscal and the debt issue, it is going to be hard to see how that confidence is going to come back anywhere. So it is a critical issue for all of us," he said.
"Restarting private investment and where it is already in place ensuring that it grows strongly is critical in this next phase of recovery. That is quite apart from the obvious drag effects of having to cut back suddenly and significantly as a result of the resolution of the medium-term," Shanmugaratnam said.
