25 Sep 2011

IMF promises action to tackle eurozone debt crisis

9:07 pm on 25 September 2011

The International Monetary Fund says it will take decisive action to tackle the eurozone debt crisis and support the global economy.

In a communique on Saturday, the agency said it would review the resources it has available and eurozone nations would do whatever necessary to resolve Europe's debt crisis.

Acknowledging that the European Union is at the centre of the crisis, the IMF said it has agreed to act decisively and collectively to restore confidence and financial stability, and rekindle global growth.

Euro-area countries will do whatever is necessary to resolve the euro-area sovereign debt crisis and ensure the financial stability of the euro-area as a whole and its member states, the board said.

IMF managing director Christine Lagarde insisted that the agency's international monetary and finance committee is serious about facing the crisis.

In an action plan presented to the fund's policy steering panel, Ms Lagarde said the IMF's current lending capacity - of almost $US400 billion - looks comfortable today but may not be enough to meet all loan requests if the European debt crisis escalates.

International Monetary and Financial Committee chairman Tharman Shanmugaratnam added that the members clearly recognise that we are in a precarious situation.

There was ... a collective resolve that we will do what it takes to prevent an escalation of the crisis.

And that we will also do what it takes to avoid the prospect of a prolonged period of stagnation in the advanced economies, and therefore a prolonged period of weakness in the global economy.

Chinese central bank governor Zhou Xiaochuan told the committee on Saturday that the sovereign debt crisis in the euro area needs to be resolved promptly to stabilise market confidence.

US Treasury Secretary Timothy Geithner called the sovereign debt pressures and banking strains in Europe the most serious risk now confronting the world economy.