The International Monetary Fund, armed with a replenished arsenal containing billions of dollars to battle Europe's lingering debt crisis, now must press governments in the eurozone to carry out bold changes to reassure nervous financial markets and avert sending the crisis into a more dangerous phase.
The IMF's final communique after hours of high-level meetings did not go beyond saying what structural reforms were needed to restore fiscal health and spur economic growth in the 17 countries that use the euro.
But US Treasury Secretary Timothy Geithner told the IMF policy-setting panel that Europe needs to be more creative and aggressive in fighting its debt crisis, employing all the financial resources at its disposal, including the European Central Bank.
“The success of the next phase of the crisis response will hinge on Europe's willingness and ability ... to apply its tools and processes creatively, flexibly and aggressively to support countries as they implement reforms and stay ahead of the markets,” Mr Geithner said.
German finance minister Wolfgang Schaeuble said the countries experiencing financial crisis in Europe are undertaking far-reaching reform measures.
“This includes labour markets, social security systems, public administrations and financial market institutions,” he said.
“This will allow countries to regain competitiveness and strong growth. It is the only way we will be able to restore confidence of our citizens and investors.”
During the weekend meetings of the IMF and its sister institution, the World Bank, finance ministers and central bank governors said the threat of a sharp global slowdown had eased, but still used words like “weak”, “fragile” and “challenging” to describe the outlook for the future.
The major accomplishment of the weekend was the pledge of at least 430 billion US dollars from individual countries that will nearly double IMF's reserves available for loans to almost one trillion US dollars.
“It is nice to have a big umbrella or a big firewall,” IMF managing director Christine Lagarde told reporters at a news conference wrapping up the discussions.
She and other officials said the extra resources should reassure financial markets that have been worried in recent weeks that Spain could be the next country in need of emergency loans from the IMF to escape a default.
The IMF, working with European governments, has provided rescue programs already for Greece, Portugal and Ireland, but Spain has a much bigger economy and would require much more financial support should it become unable to sell its government bonds to private investors.