Need to act decisively to nurture sustainable recovery: IMF

Noting that financial sector repair and reforms remained a priority,IMF said advanced economies need to balance supporting domestic demand with reforms to tackle structural weaknesses that weigh down growth.

8220;When dealing with macroeconomic or financial stability risks arising from large and volatile capital flows,macroeconomic policy adjustment could be supported by

prudential measures and,as appropriate,capital flow management measures.

8220;Such measures should not,however,substitute for warranted macroeconomic adjustment,8221; IMF said.

8220;We note the Fund8217;s increased support for Arab countries in transition and welcome the bilateral support thus far.

8220;More needs to be done by the Fund and the wider membership to support countries undertaking difficult reforms. We also welcome the Fund8217;s strengthened engagement with small states to better reflect their needs in programme design and technical assistance,8221; the communique stated.

Noting that reforms to put debt on a sustainable trajectory were critical,the communique called on the Fund to draw lessons from experiences of dealing with high debt.

8220;Global imbalances have continued to narrow,but more needs to be done to reduce the structural sources of these imbalances.

8220;To support rebalancing,deficit countries must continue to raise national saving and surplus economies must boost domestic sources of growth.

8220;In addition,fiscal and structural reforms,supported by greater exchange rate flexibility where appropriate,are needed to ensure that the correction continues,8221; it said.

Stating that a moderate and steady private sector-led recovery was underway in the United States although growth in the eurozone as a whole had yet to materialise,the communique emphasised on continued progress in improving public finances as essential in most advanced economies.

8220;Where country circumstances allow,fiscal policies should avoid pro-cyclicality,focus on structural balances,and let automatic stabilisers operate fully to support growth.

8220;Credible medium-term fiscal consolidation plans remain crucial,in particular for the United States and Japan,8221; the statement said.

The communique urged members who have yet to complete the necessary steps to ratify the 2010 reforms to do so without delay.

8220;We remain committed to complete the reform of the Fund8217;s quota and governance structure,which is key to its credibility,legitimacy,and effectiveness.

8220;We will integrate work on a new quota formula with work on the Fifteenth General Review of Quotas,8221; it said.