Bank urges end of stimulus spending
BASEL, Switzerland - The Bank for International Settlements urged governments yesterday to move away from stimulus packages as the global economy stabilizes and focus on reforming the financial system.
The bank is a key standard-setter for the world economy, acting as central bank to nations’ central banks. It said authorities need to think about the medium-term health of their economies, which means adopting policies that spur critical adjustments.
“The public resources devoted to economic stimulus and financial rescue have been staggering, approaching 5 percent of world GDP, more than anyone would have imagined even a year ago,’’ the Basel-based institution said in its 241-page annual report.
It conceded that government intervention has helped prevent a worse recession. But now that the “sense of free fall has dissipated’’ with growth possible this year, the bank said governments need to come up with plans to put their economies on a more sustainable footing. Richer countries should form growth strategies based less on debt, while developing nations should not rely on exports as the sole driver of their growth.