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Davos stalemate on EU's IMF funds

Monday 30 January 2012 - by Karina Whalley

"What I have seen and what the IMF has seen in numbers and forecasts is that no country is immune and everybody has an interest in making sure that this crisis is resolved adequately," she added.

The IMF dampened its global economic growth forecast for this year to 3.3 per cent and says the eurozone will fall into recession.

However, it projects China will grow by 8 per cent and has predicted healthy growth for other emerging countries, on condition that euro area leaders boost market confidence in the waning currency and resolve Greece's impending sovereign default.

Lagarde said that if the IMF was sufficiently bolstered, the funds would not need to be used as financial markets would be reassured of the Fund's ability to rescue distressed economies.

"The same applies to the eurozone firewall, for that matter," she added.

However, Hong Kong's head Sir Donald Tsang said: ""No matter how strong the firewall is, the market will look at the nature of the economies that this firewall is protecting."

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