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Germany should be applauded for its fiscal stimulus and climate plans, according to International Monetary Fund Managing Director Kristalina Georgieva, providing a rare moment of praise to the government.
“I want to say we have to give credit to the German authorities,” Georgieva said in a Bloomberg TV interview in Berlin Tuesday, pointing to fiscal support contained in next year’s budget. “They also came up with a very ambitious climate plan -- bravo -- may others follow. That also would inject a stimulus.”
The comments provide a more positive take on Germany’s government, which has been urged to step up fiscal spending to help both its economy and that of the broader euro area. One such call came from the IMF in October, suggesting the government “should take advantage of negative borrowing rates to invest in social and infrastructure capital.”
So far, Germany has resisted the more extreme plans floated, saying there’s no crisis it needs to respond to. Georgieva is scheduled to meet with Chancellor Angela Merkel later this afternoon.
The Bulgarian, who took on the IMF role last month, said the global economy will see a modest upswing in 2020, but cautioned that it’s still operating under a heavy cloud of uncertainty. The world needs to move from a trade truce to trade peace, she added.
“We can reach an upswing but it would require policy efforts,” she said. “It’s not going to come just falling from the sky.”
One way to help support the economy is to avoid pulling the plug on low interest rates prematurely, Georgieva said. At the same time, she acknowledged that negative rates, which helped the economy at a gloomy time, can also create risks.
One of the major items on the IMF’s agenda is Argentina, an issue which U.S. President Donald Trump waded into this month. Following Alberto Fernandez’s election win, Trump told him that he asked the IMF to work with the incoming government over the nation’s record $56 billion credit line.
Georgieva said Tuesday the fund needs to see Fernandez’s economic plans, urging him to be mindful of the impact on the poorest in the country, and also keep to budgetary constraints.
(Updates with comments from Georgieva starting in seventh paragraph.)
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