World economy improving

The world economy is recovering moderately but still faces challenges such as the need for medium-term fiscal consolidation, John Lipsky, first managing director of the International Monetary Fund (IMF), said Sunday.

"They are mainly confident that there is a moderate recovery underway globally," he told reporters, referring to delegates at the G20 meeting of deputy finance and central bank chiefs in South Korea.

"Obviously there are risks and challenges, but things seem to be moving more or less in line with our forecast," he said, listing well-designed exit strategies and medium-term fiscal consolidation as challenges.

"The steps we have taken to date have stopped the bleeding," US President Barack Obama said Saturday. "But strengthening our economy means more than that."

Lipsky also said some good progress has been made in discussing changes to the IMF's executive board, but he did not elaborate. G20 members have pledged to reach an agreement on the issue by the time leaders meet in Seoul in November.

The United States, frustrated at Europe's refusal to share more IMF power with emerging economies, took unprecedented action last month to block plans that would have kept Europe's long-running dominance over the 24-member board.

There have been ongoing plans to re-balance voting rights to give emerging economies more clout, with proposals including limiting the European Union to a single seat on the IMF board, and tipping the scale toward China and Brazil.

European Central Bank chief Jean-Claude Trichet called Saturday for Europe to hold a united position on reforming the IMF.

"I would urge the Europeans to have a united position," Trichet said when asked about the possibility of cutting the number of EU seats at the IMF.

Lipsky declined to comment onTrichet's words.

One senior official from a member country, who attended the whole of the meetings, told Reuters there was no discussion about specific currencies or currency issues, although issues related to reducing the global imbalances were a key topic.

"Delegates did not talk about any specific currencies or about a specific level of a currency, but of course they discussed global rebalancing," said the official, who did not want to be identified.

Japan, for example, is grappling with the yen's soaring to 15-year highs against the dollar, and policymakers have repeatedly said they could take decisive action on the yen - normally a code phrase for currency intervention.

Source: Global Times