The head of the International Monetary Fund warned Sunday against complacency about global finance despite improved conditions after the latest Greek debt deal and said the world urgently needs more financial reforms.
Speaking at a conference in Beijing to an audience of Chinese and foreign officials and business executives, Christine Lagarde said developed countries need to strengthen their financial systems and cope with high debt. She said developing countries need to improve their defenses against external shocks.
“The world economy has stepped back from the brink and we have causes to be a little bit more optimistic,” she said. “But optimism should not give us a sense of comfort and certainly should not lull us into a false sense of security.”
Lagarde said the global economic recovery will be “a marathon, not a sprint.”
She said European leaders need to stay vigilant about debt, focus on “steady, rigorous implementation” of financial measures, and carefully watch the economic situation in Greece.
On Thursday, the IMF approved $36.56 billion in funding for crisis-hit Greece over the next four years, as dizzily high borrowing rates have blocked its ability to raise money on the international bond markets. Greece is having to enact harsh austerity measures in return for the rescue loans.
The bailout comes as European governments try to slash deficits that ballooned in the aftermath of the financial turmoil of 2008 and this year signed off on a new set of rules that would punish countries that overspend.