With economic growth continuing to decelerate globally, there were significant downside risks, declared the International Monetary Fund (IMF) in a communique at the end of two days of talks in Tokyo.
''Global growth has decelerated and substantial uncertainties and downside risks remain,'' the IMF's steering committee said in its communique. ''We need to act decisively to break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth.''
Christine Lagarde, the managing director of the IMF, warned the 188 member-countries of the fund that they were losing momentum in reforming the international financial system. ''Let us not delude ourselves: without growth, the future of the global economy is in jeopardy,'' warned Lagarde, a former French finance minister.
According to the IMF chief, the global financial system today was not much safer than in 2008, when the current crisis erupted, triggering off a global meltdown caused by the Lehman Brothers crisis. And emphasising the need for the developed world to act now to bring about changes, Lagarde said, ''There was no objection to the recommendation that we gave to the membership, which was ACT.''
But the IMF chief's stance that debt-ridden countries like Greece should be given more time to reduce their deficits has not gone down well with many. Referring to the problems challenging Athens, she remarked, ''Given the lack of growth, given the market pressure, given the efforts that have been undertaken, a bit more time is necessary.''
German finance minister Wolfgang Schaeuble criticised Lagarde for making the suggestion for flexibility while dealing with countries such as Greece. He said that until the report by the IMF, the European Union and the European Central Bank ('the troika'), relating to the review of the 130 billion euro bailout for Greece was out, people must stop speculating about the future course of action. By reversing the steps taken till now would weaken the credibility of the institutions.