BRUSSELS (Reuters), – The International Monetary Fund on Monday stated that governments in the Eurozone should keep spending money to aid the COVID-19 economy recovery but do so more carefully and not consolidate the public finances until it has been firmly underway.

IMF’s regular report on eurozone economy was presented to group’s finance mins. The IMF stated that although consolidation can wait, there should be a way for it to be possible in the near future.

According to the IMF, “Policies must remain accommodating but become increasingly focused with a focus towards mitigating possible rises in inequality or poverty.”

The report stated, “Fiscal policy space must be rebuilt once the expansion has been firmly underway. However, credible medium-term consolidation programs should be announced immediately.”

Also, the Fund noted that inflation’s record-breaking 4.9% year-on-year in November was only temporary. It did not cause a rise in wages (called a second round effect).

Recent inflation readings are surprising on the upside. However, much of this increase appears temporary with large second-round effect unlikely,” said the report. It added that the European Central Bank’s Monetary Policy should remain accommodative.

The IMF stated that structural reforms and high impact investment (including in climate-friendly infrastructure or digitalization) are crucial for boosting resilience and potential growth.