The global economic recovery is accelerating but remains vulnerable to setbacks said IMF acting Managing Director John Lipsky said as he urged continued international support for shaky economies in Europe.
The global recovery is gaining strength. But it remains fragile and uneven, and beset by uncertainties, he said at a meeting of the Bretton Woods Committee, a private sector advisory group to the IMF and World Bank.
Lipsky expressed chagrin at having to deliver remarks in lieu of the disgraced Dominique Strauss-Kahn, who resigned as IMF managing director overnight as he faces sexual assault charges in New York.
I deeply regret the circumstances that have made it necessary for me to substitute for Dominique Strauss-Kahn, Lipsky said.
He used the speech to signal continuity, not change, and said European nations that are in critical economic condition as a result of sovereign debt crises deserve international support. Strauss-Kahn had been instrumental in helping fashion large IMF support packages for distressed European debtor nations.
There are compelling reasons for their European neighbours and the global community -- through the IMF -- to support these countries' reform efforts, Lipsky said.
The only viable option for Europe today is a solution that is comprehensive and consistent -- and that is also cooperative and shared, he added.
Some Euro zone states, including Greece, Ireland and Portugal (PIGS, if Spain is included) are facing massive debt problems. European governments have been discussing a plan to prevent a Greek default.
Lipsky said IMF officials are working with the Greek government to support that country's adjustment programs.
Lipsky told the Bretton Woods group that emerging market countries concerned about stemming a potentially volatile surge of capital into their economies might be justified on occasion in erecting capital control.
In related news the IMF approved a 26 billion Euro loan for Portugal and said it would immediately disburse 6.1 billion Euros of the money to the Euro zone member country to ease investor concerns over its debts.
The IMF said in a statement that total financing to Portugal in 2011 will include about 12.6 billion Euros from the IMF and another 25.2 billion Euros from the European Union. The funding is part of a 78 billion Euro bailout package by the EU and IMF.
The financing package is designed to allow Portugal some breathing space from borrowing in the markets while it demonstrates implementation of the policy steps needed to get the economy back on track, the IMF said in a statement.