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IMF's Lagarde fears new financial crisis

Thursday, April 10 14:22:30

Christine Lagarde, head of the IMF, today warned that governments need to do more to deal with huge government and bank debts or face the possibility of a new financial crisis.

Ahead of a set-piece address at the organisation's spring conference in Washington, Lagarde said leaders need to co-operate in their efforts to repair government and bank finances to protect against a repeat of the 2008 crash.

Lagarde also vented her frustration at persistent delays to the IMF's own reform programme, which was agreed in 2010 to increase representation from developing nations but has yet to be implemented.

She described the delay as "utterly disappointing" and pledged to press ahead "to ensure the continued legitimacy, relevance, financial strength, and effectiveness of the Fund".

The warnings against complacency echoed a report earlier in the week by the IMF that chastised Brussels for failing to put in place a financial lifeboat capable of rescuing more than a few small banks.

The financial stability report also highlighted concerns at the rise of risky investments in the US and difficulties faced by emerging economies destabilised by huge outflows of funds. Low inflation in the eurozone was also a concern, especially as it could herald a downward spiral of low growth and declining real wages, feeding on each other.