London, October 8:

The global credit squeeze is a ‘serious crisis’ that is not over yet and will have an impact on government budgets, the IMF’s outgoing head Rodrigo Rato said in an interview today.

Speaking to Financial Times from Washington, IMF MD Rato said, “Policymakers should not think that the problems will stay at the desk of the bankers. Problems are going to come to real sector, come to budgets — that is something we keep telling people.”

Rato said that it would be ‘a few months, probably into next year’ before the availability of funds returned to normal levels in the markets, which was ‘going to have an impact on growth’. He noted that the limitation on growth would mean that finance ministers would have to amend their budgets, but he said that it did not seem that many were willing to do so.

Rato added that the credit crunch, sparked earlier this year by concern in the financial markets over high-risk or subprime mortgages in the US, was ‘not a storm in a teacup’.

“The US is going to slow down. Growth in Europe looks less strong than before, and in Japan too — though Japan will probably stay potential,” said Rato, who will be succeeded by former French finance mi-nister at the end of October.