Intl financial framework evolved amid new emerging global economy landscape
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Debt, capital inflows
Referring to the Greek debt crisis, financial leaders said many challenges remained to be tackled collaboratively despite some encouraging signs of a strengthened world recovery.
Kahn said the world is faced with several key issues as it moved into a phase of rebuilding, including continued high unemployment, rising official debt, and the risk from increased capital flows to emerging markets.
In its latest Global Financial Stability Report, IMF said the health of the global financial system has improved as the economic recovery has gained steam, but advanced country sovereign risks could undermine stability gains and take the credit crisis further down the road, while emerging market countries face the risks of inflation and asset price bubbles resulted from the surge of capital inflows.
It said that governments in advanced countries need to adopt policies that can reduce sovereign risks through well designed fiscal consolidation strategies, clean up the crisis legacy and facilitate a smooth process by ensuring that a core of healthy, viable banks is able to provide credit.
Meanwhile, a pragmatic approach using a combination of macroeconomic and prudent financial policies is advisable for emerging countries, IMF said.
IMF called on world leaders to decisively move forward the regulatory agenda and complete the transition to a safer, more resilient and dynamic global financial system.
Another challenge "very much on the radar" of the IMF and World Bank is the low-income countries.
Statistics show that 2010 will see some 65 million people added to the lines of poverty, with 18 million in Africa.
World financial leaders agreed to mobilize additional resources and support, within the IMF and in other international organizations to address poverty as early and as quickly as possible.
