Monetary Fund Warns G-7 on Debt Levels

The IMF warned on Wednesday that the G7 economies have little room to move after the "record levels of debt" they faced in 2008/2009. However, they also stated that Greece, Italy and Portugal's risk of default "had been significantly overestimated." A fear of this is that it could “trigger an increase in interest rates that would drive a formerly sustainable country into a situation of unsustainability.” The IMF thinks a way to fix the financial pressures is not to respond in a quick and drastic manner but to "downsize" the role of the government except when it comes to dealing with provisions of basic goods and services and when it comes to giving equal opportunities. The low interest rates among the G7 has done a good job in keeping debt payments low, and also has allowed a window of opportunity to start an adjustment process.