The International Monetary Fund says structural reform, in particular of the pension system, is vital for Europe to achieve medium-term economic sustainability.
“I think more and more we have reached the point where structural reforms are the first line of defence,” said IMF research director Kenneth Rogoff in Washington recently.
He continued: “And in terms of budget policy, really long-term budget policy dealing with the pension problems, that’s what is really needed to achieve medium-term sustainability.”
He said that the IMF does not believe that monetary policy on its own would be able to “pull Europe out of its doldrums”.
Rogoff maintained that the industrialised world as a whole needs to face the issue of demographic ageing by raising the age of retirement.
“Raising the age of retirement has to be one piece of any solution, and implementing such a policy is as important as any measure most industrialized countries could take towards achieving medium term fiscal sustainability.”

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