23 Apr 2012

IMF urges Europe to take bold action

6:57 am on 23 April 2012

The International Monetary Fund has pressed Europe to take advantage of newly increased financial buffers and make the lasting reforms needed to tackle its debt crisis, which it says is threatening the world recovery.

Advanced and emerging countries have agreed to double the lending firepower of the IMF to $US430 billion to help contain Europe's debt crisis.

The IMF's governing panel says the 17-nation euro area must make more cuts to government debt burdens, push bold economic reforms and stabilise financial systems.

Looking ahead, the organisation says global growth is expected to be moderate and risks remain high.

While it says all advanced economies must take further action, it singled out the euro area as crucial to revitalizing strong growth.

The euro area, the world's second-largest economic bloc, already has slipped into a mild recession, weakening its major export partner China and other parts of emerging Asia, while growth in the United States remains sluggish.

Unless stronger growth is restored and investor confidence returns, the IMF says, the world will not break out of a vicious debt-driven cycle.