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IMFâ€™s Lagarde Says Failure on U.S. Debt Limit Will Be a â€˜Shockâ€™

11 July 2011 13:28 (UTC +04:00)

Baku - APA-Economics. Christine Lagarde, the new head of the International Monetary Fund, said failure to find agreement on raising the U.S. debt ceiling will jeopardize global economic stability.

The former French finance minister said today on ABCâ€™s â€œThis Week with Christiane Amanpourâ€ that the IMF is â€œconcernedâ€ and â€œvery much hopingâ€ American lawmakers will compromise on raising the debt limit before an Aug. 2 deadline. She said she expects an agreement, adding that she canâ€™t â€œimagine for a secondâ€ that the U.S. would default.

A default â€œwould be a real shockâ€ to the worldâ€™s largest economy, said Lagarde, who took her post July 5. It would cause interest rates to jump, â€œstock markets taking a huge hit, and real nasty consequences, not just for the United States, but for the entire global economy, because the U.S. is such a big player and matters so much for other countries,â€

President Barack Obama is meeting with congressional leaders today to break a partisan impasse over reducing the budget deficit and increasing the governmentâ€™s $14.3 trillion debt limit. The Treasury Department has said the ceiling must be raised before Aug. 2 to avoid a default.