The International Monetary Fund, armed with a replenished arsenal containing billions of dollars to battle Europe’s lingering debt crisis, now must press governments in the eurozone tocarry out bold changes to reassure nervous financial markets and avert sending the crisis into amore dangerous phase.
According to The Associated Press, the IMF’s final communique Saturday April 22 after hours of high-level meetings did not go beyond saying what structural reforms were needed to restore fiscal health and spur economic growth in the 17 countries that use the euro.
But U.S. Treasury Secretary Timothy Geithner told the IMF policy-setting panel that Europe needs to be more creative and aggressive in fighting its debt crisis, employing all the financial resources at its disposal, including the European Central Bank.
German Finance Minister Wolfgang Schaeuble said the countries experiencing financial crisis inEurope are undertaking far-reaching reform measures.
“This includes labor markets, social security systems, public administrations and financial market institutions,” he said. “This will allow countries to regain competitiveness and strong growth. It is the only way we will be able to restore confidence of our citizens and investors.”
During the weekend meetings of the IMF and its sister institution, the World Bank, finance ministers and central bank governors said the threat of a sharp global slowdown had eased, butstill used words like “weak,” ”fragile” and “challenging” to describe the outlook for the future.
The major accomplishment of the weekend was the pledge of at least $430 billion from individual countries that will nearly double IMF’s reserves available for loans to almost $1trillion.