US Default Would Be Catastrophic -- IMF

International Monetary Fund: US default would be "catastrophic"

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International Monetary Fund Managing Director Christine Lagarde says the current fight in Washington over the debt ceiling and the threat of possible default is a very serious matter.

She made the comments in a sit-down interview following a New Year's press briefing.

[Christine Lagarde, Managing Director, International Monetary Fund]:
"If it is not resolved appropriately - by it being raised on time and earlier than the last time if possible - it could be catastrophic for the global economy, which is why everybody thinks that it will not happen and I very strongly hope that all parties, all views will converge in the national interest of the U.S. economy and in the international interest of the global economy. Because to imagine the U.S. economy would be in default, would not honor the payments that it owes, is just unthinkable."

A veteran of political battles herself - as a former French finance and economy Minister - Lagarde is confident a solution will come.

[Christine Lagarde, Managing Director, International Monetary Fund]:
"I have huge faith in the United States and I very much welcome U.S. leadership on that issue and I hope that this is resolved properly and on time."

And she goes on to say - it's the getting the "on time" part right that poses the most harmful risk to the global economy.

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