International Monetary Fund (IMF) Managing Director Christine Lagarde said Thursday that despite recent improvements in the global economic outlook, more work is required to support the still fragile recovery. “We have seen some improvement in the economic climate. But let me also underline this point: the risks remain high, the situation [remains] fragile,” Lagarde said in a speech at the Brookings Institute think tank in Washington. Lagarde called on policymakers to take this “opportunity to push on and take the further actions that are certainly needed to keep the crisis at bay and finally put it behind us.” Policy actions in Europe and elsewhere have helped to reduce vulnerabilities, Lagarde said. “The steps taken by the Europeans in recent months are a timely reminder of the power of policy resolve and action,” she said, adding that through that hard work, “we have earned a bit of time to think through and to actively pursue what still needs to be done.” Given the risks posed by sovereign and financial stresses, European policymakers should “keep up and build on” their efforts, including through strong country-level policies, support from the European Central Bank, repairing the banking system, and fiscal integration, Lagarde said. “The much expected decision of Euro Area Ministers to strengthen the European financial firewall has also been crucial.” In today's interconnected global economy, however, Lagarde noted that a stronger European firewall can only ever be part of the solution. A stronger global firewall will help complete the “circle of protection” for every country, including those not immediately affected by the crisis. Lagarde emphasized that “through a collaborative approach, we have a better chance of success.” The IMF, with its 187 member countries recognizes “what can be gained through collaboration.” She added that it was important that the Fund's governance structure should fully reflect its membership and, in this context, she urged “all members to complete the 2010 quota and voice reforms in a timely way.”
