The IMF pledged firm collective action on Saturday as warnings surged from around the world over a possible European economic meltdown.
With calls for the EU to move coming from all sides — including China, the US, Brazil and a host of fragile poorer countries — the IMF said European leaders would take whatever action was needed to prevent the current debt crisis from escalating.
However, worries remained that moves to fix fiscal deficits in Europe and the US were already hurting the rest of the world, with surplus liquidity fueling food and oil price increases and market volatility, and spending cuts choking off growth, investment and trade.
And it was hardly clear whether the second statement by the world’s top financial officials on the eurozone crisis in two days would head off more panic in markets, which have plunged since July on worries over the developed economies.
Acknowledging that Europe is the focus of the current crisis, the IMF’s policy board said it had agreed to act decisively “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 world’s top financial officials were serious about facing the crisis.
“There was no denial, no finger-pointing,” she said of the meeting of the IMF’s powerful International Monetary and Finance Committee.
Committee chairman Tharman Shanmugaratnam said: “There was not just individual resolve, but a collective resolve that we will do what it takes to prevent an escalation of the crisis.”
It was an echo of late Thursday’s surprise statement by the G20 following a particularly violent one-day plunge in global markets.
“We are taking strong actions to maintain financial stability, restore confidence and support growth,” they said.
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