FOREX WORLD TREND

THE International Monetary Fund has backed the Federal Government's response to the global economic crisis - even giving an apparent green light to go further into debt.
It is also warning central banks to be sure the global downturn is over before thinking about raising official interest rates.

In its annual Article IV consultation with Australia, the IMF said the government's stimulus measures were boosting activity and there was still further room to move if the apparent pick-up went backward.

"The authorities' timely and significant macro-policy response cushioned the domestic impact of the global financial crisis," the IMF said.

"Staff commended the quick implementation of fiscal stimulus and noted that the shift into deficit was justified in current circumstances."

A drop in company tax receipts, particularly from the mining sector, as well as the government's economic stimulus measures are expected to push the budget into $58 billion deficit this financial year.

The IMF sees room for further stimulus, if needed.

"Staff and authorities agreed that, given the low level of public debt, there is scope for further fiscal stimulus, if the outlook for growth weakens," it said.
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