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US fiscal impasse affects global economy: World Bank

Source : IANS
Last Updated: Fri, Oct 11, 2013 06:10 hrs

Washington, Oct 11 (IANS) The fiscal uncertainties in the US have global implications and will undermine the efforts to end poverty in developing countries, the World Bank said.

"The US remains the biggest economic power in the world and whatever happens here is going to affect all the developing countries," Xinhua quoted Sri Mulyani Indrawati, World Bank Group's managing director and chief operating officer, as saying Thursday.

The US debt ceiling issue is clearly getting attention around the world, and it is in everyone's interest for the fiscal dispute between US Democrats and Republicans to be resolved in a timely manner, she told reporters during a press briefing.

As the US government shutdown is in its 11th day, Washington faces another fiscal deadline. The federal government will reach its debt ceiling of $16.7 trillion by Oct 17, and failure to raise it would lead to a catastrophic default, US Treasury Secretary Jacob Lew has said.

The lingering US fiscal wrangle will push borrowing costs higher in developing countries, shifting their resources to service the debt from projects targeted at reducing poverty and enhancing shared prosperity.

Global economy has some good news as the European economy is picking up steam, but on the other hand, "we are still very concerned" about the fragile recovery of the global economy against the backdrop of the US fiscal impasse, Indrawati said.

The World Bank Group is committed to the main goals of ending extreme poverty by 2030 and promoting shared prosperity.

The Washington-based agency stands ready to help developing countries strengthen their policy frameworks to achieve robust and inclusive growth, she added.



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