At the start of the annual meeting of the International Monetary Fund and the World Bank, IMF chief Christine Lagarde has squared off against German Finance Minister Wolfgang Schäuble in a debate.
The discussion between Lagarde and Schäuble in Tokyo on Friday focused mostly on the eurozone crisis and the global importance of bringing it to a swift end.
"There's no alternative to reduce in the medium term sovereign debts that are too high," Schäuble said.
This appeared to contrast with Lagarde's position, which she expressed on Thursday, that heavily indebted countries should be given more time to tackle their problems. Referring specifically to Greece, she said an additional two years may be necessary.
Schäuble said it would be premature to speculate on Greece without first examining a pending report from the so-called troika of the EU, the European Central Bank and the IMF. This report is expected next month and will outline how well Greece is sticking to its pledged program of austerity designed to secure further funds from an international bailout.
Lagarde warned on Friday that sovereign debts in rich nations around the world were comparable to those seen in wartime.
"High debt in turn makes it harder to get growth, so it's a very narrow path that needs to be taken," she said. "It's probably a long path and one for which there's probably no short cuts either, but that's the path that needs to be taken."
Sluggish economies around the world and high unemployment have made it difficult for many countries to effectively combat their debt problems. In a statement from the International Labor Organization (ILO), director general Guy Ryder said there were nearly 30 million more unemployed people than before the global economic crisis began in 2008.
"With growth slowing around the world, there is a high risk of the world economy sliding into a period of sustained high unemployment and declining labor force participation, which would lead to subpar growth into the foreseeable future," Ryder said in a statement.
On Thursday, Greece announced that its national unemployment had topped 25 percent.
The ILO said young people are especially affected. Around 75 million of the 200 million globally unemployed people are under 25, according to the organization's figures.
"Coordinated action by the governments of the world's leading economies can and must prevent a slide into a political, economic and social quagmire," Ryder said.
mz/tj (AFP, Reuters)