Mr. Chairman,
The central problem we face today is how to ensure protect global growth in a situation where markets have become very nervous about debt sustainability, especially in some countries in the Eurozone. Concerns about debt sustainability normally suggest a need for fiscal contraction. But circumstances are not normal. The recovery is still fragile and private demand in the industrialized countries is likely to remain weak. Contractionary policies, if followed by many industrialized countries simultaneously, could provoke a double dip recession. This would have very negative effects on developing countries, and on the prospects for achieving the Millennium Development Goals.

I recognize that there are uncertainties and it is difficult to strike the right balance. But on the whole, I feel the risks of destabilizing the recovery are too great. We have a much greater risk of deflation than inflation. We must, therefore, give primacy to consolidating the recovery, while also taking measured steps to deal with sovereign debt problems.