Washington: The IMF chief said she is worried about the US debt ceiling battle, saying the lack of a solution would hit economies around the world, according to text from an interview with CNN released Friday.
Christine Lagarde, managing director of the International Monetary Fund, also said the US needs to keep economic rationale in the solution and not just take the politically expedient path.
"I am worried because this debt ceiling issue has not been cracked," she told the CNN television network, according to an excerpt of an interview to be broadcast today.
"The United States is the largest economy in the world, one that matters, one that has spillover effects, not just around the borders but on a complete basis, globally."
So the deadlock over raising the country's debt ceiling — which could lead to the US defaulting on its debt — is "an issue that really is lurking in the background of each and every economy of the world," Lagarde said. "There is no magic bullet," she said.
"Sometimes you have to settle for the second-best option... the one that will be politically acceptable.
"But the States should not be only focused on strictly political objectives. It has to be a mixture of political feasibility but based on solid economic rationale."
That rationale, she added, is about "making sure that in the medium term the USA — like many other nations — addresses the fiscal consolidation issues that have to be addressed".
On Thursday Lagarde said in an interview with US television network PBS that failure to resolve the US debt crisis would likely raise doubts about the dollar's status as the world's prime reserve currency.
