IMF managing director calls for urgent action to save world economy from a downward spiral

DUSHANBE, January 24, 2012, Asia-Plus  -- On Monday January 23, the International Monetary Fund (IMF) Managing Director Christine Lagarde called on the international community to take urgent collective action to save the world economy from a downward spiral, press release issued by IMF said.

“The longer we wait, the worse it will get. The only solution is to move forward together. Our collective economic future depends on it,” Lagarde said in a speech at the German Council of Foreign Affairs in Berlin. “Looking at it from this perspective, 2012 must be a year of healing.”

She laid out the main elements of a policy path forward. Europe, which is at the center of global concerns, needs stronger growth, larger firewalls, and deeper integration, she said, but added that other economies also have an important role to play to restore balanced global growth.  As for the multilateral component, Lagarde said that the IMF was ready to help and was seeking to increase its lending resources by up to $500 billion.

“We must all understand that this is a defining moment. It is not about saving any one country or region.  It is about saving the world from a downward economic spiral,” she said.

The IMF reportedly estimates that in coming years, additional global financing of potentially $1 trillion could be needed, which the Fund can help meet with additional lending resources.

“A cooperative path means that all countries must work together with a common diagnosis toward a common solution,” Lagarde said, adding that the Fund can push for such a cooperative outcome through its analysis and policy advice, but also help by providing financing when needed.

“I am convinced that we must step up the Fund’s lending capacity,” she said.  The goal here is to supplement the resources Europe will be putting on the table, but also to meet the needs of other countries, anywhere in the world, affected by the repercussions of the crisis, she added.

Eurozone countries have already pledged to provide up to $200 billion in new financing for the IMF.