(MENAFN - Kuwait News Agency (KUNA)) International Monetary Fund (IMF) Managing Director Christine Lagarde on Friday put the fund's first priority to restore growth, especially to end the scourge of unemployment amid sweeping big challenges the world is facing.
Addressing the annual plenary session meeting of the IMF and World Bank in Tokyo, Lagarde said without growth, the future of the global economy is in jeopardy.
"Perhaps the greatest roadblock will be the huge legacy of public debt, which now averages almost 110 percent of GDP for the advanced economies, the highest level since World War II. The global recovery is still too weak. Job prospects for untold millions are still too scarce. The gap between rich and poor is still too wide," she noted.
The IMF has lowered its global growth forecast for 2012 to 3.3 percent from 3.5 percent.
The Euro-zone is being severely tested, and it must keep pushing ahead with implementing the policy initiatives it has announced, she said.
"But we should also recognize that deeper banking and fiscal integration, alongside deep-seated structural reforms, will fortify its economic foundations and lay the groundwork for a stronger and more resilient union in the future.
" IMF chief also said the Middle East is transforming and the road ahead will be fraught with difficulty, but expressed confidence that the promises of the Arab transformation will shine through as a beacon of hope.
She also attached importance to a better financial system in the modern global economy.
"Today, despite some progress, the system is not yet much safer than at the time of Lehman. It is still too complex.
We must complete the agenda of financial sector reform: better regulation, better supervision, better resolution of cross-border entities, sensible incentives in financial institutions, and a level playing field for the sector."
According to Lagarde, the Washington-based lender is focusing more than ever on economic and policy spillovers -- how what happens in one country affects others.
"Your decision earlier this year to boost our resources by USD 456 billion is a huge vote of confidence in the fund," she said, praising contributions by member economies of the IMF to increase the fund's lending capacity to address the Euro-zone's debt crisis.
As for the 2010 IMF quota and governance reforms aimed at increasing voting rights of emerging economies through redistribution of quotas and the number of board members, she admitted the fund has not achieve the required voting power majority for approval.
The IMF has so far secured over 75 percent of the total voting rights, or more than 120 countries, she said. But to fully implement the governance reform, the IMF needs to secure more than 85 percent of the total voting rights among 188 member economies. If the reform is implemented, Brazil, China, India, and Russia will all be among our top 10 shareholders.
"The good news is that we have made great progress toward this reform. Now we must push ahead to get the 85 percent of voting power required to complete the Board reform and the 2010 package. I am again urging our membership to reach the finish line."
