IMF pushes for more action as Europe's recovery drags
| Tokyo
The IMF prodded the world's rich countries for swifter action on Thursday as听's debt crisis drags on while the听听补苍诲听听show scant progress handling their budget deficits.
, managing director of the International Monetary Fund, said political wrangling added to economic uncertainty, slowing growth in both advanced and emerging economies. The IMF cut its global growth forecast this week for the second time since April.
"We expect action and we expect courageous and cooperative action on the part of our members," Lagarde told reporters ahead of the IMF's twice-yearly meetings in听.
The slowdown has not spared emerging market economies, which were instrumental in pulling the global economy out of recession in 2009.听听cut interest rates on Wednesday and听听on Thursday.
"Developing countries, which have been the engine of growth, will not be immune the increased uncertainty in the global economy," said听听President Jim Yong Kim.
"The economic announcements emanating in recent weeks have been sobering. Everyone is vulnerable in times of uncertainty but especially the poor who have few, if any, safety nets and resources and live from day to day."
The IMF has expressed frustration with听's piecemeal response to its debt crisis and warned that a recent respite in borrowing costs for debt-laden countries such as听听may prove short-lived unless euro zone leaders come up with a comprehensive and credible plan.
In its financial stability report on Wednesday, the IMF said that without swift policy action, including the triggering of the听's bond-buying programme, the premium that investors demand to hold Spanish and Italian debt instead of safer German bonds would nearly double.
Standard & Poor's cut its rating on听听on Wednesday to a level just above junk territory, and听听may soon follow.
The IMF has said it stands ready to support a European bailout for听, should听听ask. Reuters reported on Oct. 1 that听听was ready to seek help, but that听听was blocking an aid request because it preferred to combine a Spanish rescue with additional assistance for other struggling countries such as听.
, the head of the IMF's monetary and capital markets department, warned that countries must not withhold help if听听were to ask the听听to buy its bonds under a new bailout programme, known as OMT for Outright Monetary Transaction.
"If it were to be the case that they decide to activate this mechanism and they can submit to the proper degree of conditionality, it would be essential that the creditor countries do not negate this activation of the OMT for听听or for any of the countries," Vinals told Reuters.
TRUE MONETARY UNION
's finance minister,听, called the euro zone's debt and financial sector problems the biggest risk to the global economy and said it was crucial for听听to quickly implement agreed steps to resolve the crisis.
"We hope that European countries will overcome conflicts in opinions and strengthen their efforts to unite together and establish a monetary union in the true meaning," he said.
But听听also drew criticism from the IMF for failing to come up with a medium-term plan to address its own debt difficulties. In its financial stability report, the IMF said听's troubles provided a "cautionary tale" for听听that waiting to address its towering debt - estimated at more than twice its annual gross domestic product - could be costly.
European officials are keen to ensure their region is not the sole topic of discussion, and want more attention placed on the difficulties Washington faces addressing its "fiscal cliff" of automatic spending cuts and tax increases that will take effect early next year unless听听acts.
The IMF projected that the fiscal contraction would amount to more than 4 percent of total U.S. economic output and plunge the world's biggest economy back into recession.
The Fund itself is struggling to muster the sort of decisive action that Lagarde wants to see from world leaders. Its 188 member countries meet on Friday and Saturday, and will fall short of a goal to implement voting reforms that would give large emerging economies greater say and elevate听听to the No. 3 spot in IMF power.
A territorial dispute between听听补苍诲听听added another element of disharmony.听's top central bank and finance ministry officials backed out of the meetings and sent deputies to听听instead. Lagarde said she hoped the world's second- and third-largest economies could resolve their differences "harmoniously and expeditiously."
"I think they lose out by not attending the meeting," she said of the Chinese officials. "And they will be missing something great."
