LUXEMBOURG, June 19 The euro zone's fiscal
stance is close to neutral now after years of austerity and
strikes the right balance between debt reduction and supporting
demand to help economic growth, the International Monetary Fund
said in a statement on Thursday.
The euro zone's overall government deficit fell to the
European Union's limit of 3 percent of economic output in 2013,
from 6.2 percent in 2010 -- the year when it had to bail out
Greece for the first time.
The sovereign debt crisis that followed plunged the euro
zone into a deep recession. The economy is now recovering slowly
and euro zone policy-makers are discussing how to strike the
right balance between reducing huge public debts and stimulating
"After several years of consolidation, the overall fiscal
stance for the euro area is close to neutral. This strikes the
right balance between demand support and debt reduction. But
large negative growth surprises should not trigger additional
consolidation efforts," the IMF said.
The IMF noted said the recovery was neither robust nor
sufficiently strong and said continued support for demand in the
9.6 trillion euro economy was vital.
The IMF praised the steps the European Central Bank took in
early June to help accelerate dangerously slow inflation, but
noted more might be needed if the measures already deployed
"The ECB's willingness to do more, if necessary, is
reassuring. If inflation remains stubbornly low, the ECB should
consider a large-scale asset purchase program, primarily of
sovereign assets according to the ECB's capital key," it said.
"This would boost confidence, improve corporate and
household balance sheets, and stimulate bank lending. Overall,
it holds the potential to have a significant impact on demand
and inflation," it said.
(Reporting By Martin Santa, editing by Jan Strupczewski)