[stop-imf] IMF to Germany: More Pain, Please

[Robert Weissman]

http://www.forbes.com/work/feeds/afx/2005/12/07/afx2374649.html

AFX News Limited
IMF's Rato says German labour market reform not ambitious enough
12.07.2005, 07:01 AM

FRANKFURT (AFX) - International Monetary Fund (IMF) head Rodrigo Rato
said Germany's new government should be more ambitious in reforming the
country's labour market, according to the pre-release of an interview to
appear in Capital magazine tomorrow.

The reform programme of the coalition government formed by the
Conservatives and Social Democrats goes 'overall in the right
direction', he told the magazine.

But he called for more reforms of Germany's ailing labour market,
saying: 'Liberalisation should be even more ambitious.'

'What we still miss for the moment is the prospect for structural
reforms in the medium term', he added.

Rato said plans to reduce the German budget deficit to below 3 pct in
2007 from nearly 4 pct currently are 'adequate'.

But he said this should be achieved 'preferably by cutting tax
exemptions and expenditure rather than through tax hikes'.

The German government plans to raise value-added tax by 3 percentage
points to 19 pct in 2007.