Monday July 6, 10:54 AM
Banks' balance sheets clean-up incomplete: IMF chief
GENEVA, Switzerland (AFP) - IMF chief Dominique Strauss-Kahn on Monday said that banks still had work to do to clean up their balance sheets, adding that economic recovery would not come until this process was over.
"You never recover until you clean up the balance sheets of the banks. This has not been completely done," he told a World Trade Organisation two-day conference on the "Aid for Trade" process.
Strauss-Kahn pointed out that central banks have acted decisively with measures to mitigate the financial crisis, and governments have also responded to the IMF's call in early 2008 for 2.0 percent of gross domestic product to be spent on a global stimulus to kickstart the economy.
However, he noted that there remained a missing link to recovery -- banks' efforts to clean up their balance sheets.
"A lot has been done but a lot still has to be done. Depending on the speed of the cleaning of balance sheets of the financial sector, recovery will come sooner or a bit later," he added.
In April, the IMF projected the global economy would shrink 1.3 percent in 2009, and that growth would come in 2010, but at a sluggish rate of 1.9 percent.
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