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The
International Monetary Fund said global recovery will be hastened if
cooperation is embraced by the international community as
nation-oriented responses are not the way out.

“The
world avoided a great economic depression and will recover thanks to
close cooperation from the international community”, said the funds
head, Dominique Strauss-Kahn. He noted that success came from the
approach championed by world leaders of the G-20 group of advanced and
emerging economies and the IMF at the height of the crisis.

Mr.
Strauss-Kahn who made the remarks during the kick-off to his week-long
trip to Brazil and Peru on solutions to the global crisis said,
“National oriented responses are not the way, since they risk creating
economic conflicts,” and that financial regulation in particular should
be coordinated internationally.

Concerns Remain

John
Lipsky, First Deputy Managing Director, International Monetary Fund at
the seminar, titled “Reshaping the Global Financial Landscape” said
unemployment is high across the globe and financial sectors still need
repairs.

He
said global recovery from the financial crisis that hit economies still
remains lethargic and uneven among nations while unemployment is high
across the globe.

“The global recovery remains sluggish, uneven and still in need of policy support”, he said.

According
to him, lingering challenges include high unemployment across the
globe, a financial sector still in need of repair, public debt rising
sharply in some countries – including most of the large advanced ones –
and the welcome resumption of large-scale capital inflows underscoring
the need for emerging market countries to prepare to meet new
challenges.

“History
tells us that the next crisis, if and when it comes, is unlikely to
exactly mirror recent events, but rather it will be rooted in new
vulnerabilities and transmitted through new channels. We should be
thinking now how to limit the potential dangers when new risks arise”
Mr. Lipsky said.

Looking ahead

Looking
ahead, the fund says it will examine further reforms of its lending
facilities in order to boost the availability of precautionary and
crisis financing for its membership.

“For
instance, we could make FCL qualification more predictable, while
extending its duration and scope. For those members that do not
qualify, alternative contingent instruments that have an element of
predictability and automaticity could be designed. At the same time,
the Fund is considering how it might be able to offer a short-term
contingent facility that would provide adequate liquidity in a timely
way in response to future market strains”.

With
recoveries taking shape, policymakers have turned their focus in recent
months to the pending issue of financial sector reform. The IMF says
this is entirely appropriate-as failures of financial regulation and
supervision were a major factor behind the current crisis.

Bismarck
Rewane, the managing Director, Financial Derivatives Company however
said the global recovery is now fairly stable. “The pace and depth of
the expansion is mixed and is varied across nations and regions. The
big challenge in the advanced economies is how to ensure that the
financial systems are strengthened to withstand future shocks. There
are some similarities and significant differences between the
approaches being adopted in repositioning the banking systems”.

He
however said that Sub- Saharan Africa is now estimated to grow by 4.75
per cent in 2010 compared to two per cent in 2009. 2011 is even looking
brighter with IMF estimates now being put at 5.75 per cent, adding that
oil exporters and middle income countries fared much worse than others.

According
to him, in Nigeria, the GDP growth is showing signs of resilience and
sustained growth even though there seems to be a disconnect between
data and the level of economic activity, especially jobs. “The
unravelling of the banking sector problem and pro-cyclical therapy
helped stifle any hope of early recovery” he said.

By providing critical financing to a broad array of countries over
the last two years, the IMF has played its part as a central pillar in
the global financial safety net. But the crisis has shown that to serve
as a truly dependable global lender of last resort, the Fund will need
adequate resources.