Austerity measures threaten global recovery—UN

GENEVA—The UN warned Wednesday that austerity measures in countries such as Greece threaten a global recovery, and called on governments to take social implications into account when drafting policies.

“Austerity measures in response to high government debt in some advanced economies, such as Greece and Spain, are not only threatening public sector employment and social expenditure, but also making the recovery more uncertain and fragile,” said the UN department of economic and social affairs in a report.

Heavily indebted Greece is being forced to deepen and accelerate its reforms in order to qualify for further loans from the European Union and International Monetary Fund.

However, the austerity measures being imposed in return have led to mounting social unrest in the country.

The United Nations report stressed that “it is essential that governments take into account the likely social implications of their economic policies.”

It also criticized lending conditions set by institutions such as the IMF.

The report noted that 31 out of 41 agreements with the IMF included pro-cyclical policies – such as cuts in fiscal deficits – which could exarcerbate a slowdown.

“International financial institutions … continue to attach pro-cyclical conditions to the financial assistance packages they extend to countries in need and have paid insufficient attention to the social implications of such policies,” it said.

“Countries need to be able to pursue countercyclical policies in a consistent manner.

“Such policy space should be enabled by changing the fundamental orientation and nature of policy prescriptions that international organizations impose on countries as conditions for assistance.”