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US: No time for complacency on world economy

US Treasury Secretary Jacob Lew (R) after the G20 meeting in Washington, DC, on April 19, 2013
US Treasury Secretary Jacob Lew (R) and British Cancellor of the Exchequer George Osborne chat following the G20 meeting at the 2013 World Bank/IMF Spring meetings in Washington, DC, on April 19, 2013. Lew told IMF members Friday that more determined effo

US Treasury Secretary Jacob Lew told members of the International Monetary Fund Friday that more determined efforts were needed to strengthen global economic growth and generate jobs.

He also said in a statement to the institution's key advisory board that Europe needs to boost demand and ease the pressure on troubled periphery countries to quickly balance their budgets, warning of the danger of "austerity fatigue."

"This is not a time for complacency," Lew told the International Monetary and Financial Committee, which guides IMF policy, as the IMF and World Bank held their annual spring meetings in Washington this week.

While some immediate risks have been avoided, "global growth remains weak, and unemployment is still too high," Lew said.

"Strengthening global demand is imperative and must be at the top of our agenda," he said, reiterating a message US officials have emphasized to European colleagues in recent weeks.

"Stronger demand in Europe is critical to global growth. Weak domestic demand has undercut euro area growth for six consecutive quarters and output continues to contract."

He pointed to the need for Europe's surplus economies to boost demand to take the pressure off the ailing periphery countries like Italy, Spain, Portugal and Greece.

He also said that the Cyprus crisis underpinned the need for Europe to push ahead with a full banking union.

But he also said that countries with financial surpluses -- like Germany and China, though they were not named in the statement -- needed to do more to strengthen the global economy.

"There is now broad agreement that we cannot return to a pattern of global growth that is built on US households being the world's importer of first and last resort."

Lew also stressed the United States's commitment to development -- boosting growth in poor countries, improving food security and health care, with putting the empowerment of women at its core.

In a letter to the Development Committee, a panel that advises the IMF and the World Bank, Lew said the US supports the World Bank's leading role in shaping the development agenda.

"As private flows outpace official development dollars, we want to see the World Bank continue to be the standard bearer in the global system," he said.

He praised the World Bank's Global Agriculture and Food Security Program, launched to implement Group of 20 pledges made in 2009 aimed at cutting poverty and hunger.

As of this year, Lew said, the US has fulfilled nearly $330 million of its initial pledge of $475 million.

"We will continue to encourage increased financial support for GAFSP from our partners in the months to come, as addressing global food insecurity remains a long-term challenge," he said.

Lew highlighted that high- and low-income countries are struggling to find new ways to create jobs.

"Scarce public dollars cannot meet the pressing global needs of climate, food security, energy infrastructure or employment without mobilizing local and foreign investment and engaging the private sector," he said.

"We will continue to press the World Bank Group to play a leading role in private sector development."

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