IMF urges Europe to act swiftly on debt crisis

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IMF urges Europe to act swiftly on debt crisis

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The International Monetary Fund has warned that the global economy recovery could be at risk and that Europe’s policy makers must act more quickly to solve on the continent’s debt crisis.

It has trimmed its growth projection for next year to 3.9 percent from the 4.1 percent prediction it made in April.

The IMF sees just 0.7 percent growth in the crisis-hit euro zone in 2013, while maintaining its projection of a 0.3 percent contraction this year.

José Viñals, the IMF’s Director of Monetary and Capital Markets, told euronews that finding a solution is a question of political will.

“The key issue is: are the political leaders in Europe willing to do whatever it takes in order to put the monetary union on as firm grounds as it needs to be – or not? I think that the answer is yes and I hope that the delivery of this, whatever it takes, will be coming forward soon,” he said.

Viñals believes the planned banking union is a step in the right direction – but stresses that the member countries have a lot homework to do before that can happen.

“Let’s not forget that banks are a national responsibility now, and that the authorities of the different countries, where there are banks with some problems, they have to do whatever it takes to make sure that the banks are adequately capitalised and, when necessary, restructured or liquidated if they are non-viable banks,” he said.

The IMF also warned the productive capacity in a number of emerging market economies, such as China, India and Brazil, may be lower than previously thought and future growth could disappoint.