The head of the IMF has called on the world's richest nations to take urgent action to tackle the eurozone's debt crisis, which includes taking some of the pressure off of Greece.
Christine Lagarde stressed on Thursday that political wrangling and inaction were fostering uncertainty, thereby hindering economic recovery. As the International Monetary Fund's (IMF's) twice-yearly meeting with the World Bank got underway in Tokyo, she warned that "more needs to happen and faster" to tackle the crisis.
"Whether you turn to Europe, to the United States of America, to other places as well, there is a level of uncertainty which is hampering decision makers from investing and from creating jobs," Lagarde told reporters. "We need action to lift the veil of uncertainty."
Lagarde referred to specific countries in Europe that are struggling to balance sluggish economies with the need to cut spending in order to qualify for international bailouts. In the case of Greece, she said the country would need an additional two years to "actually face the fiscal consolidation program." Lagarde also said more time would be beneficial for Spain and Portugal.
She went on to warn that in the time since the IMF last met in Washington earlier this year, the global economic slowdown had exhibited a growing "ripple effect in emerging markets, particularly in Asia."
Her comments were backed by World Bank President Jim Yong Kim who warned that developing countries were not "immune (from) the increased uncertainty in the global economy."
Emerging markets were considered instrumental in pulling the global economy out of recession in 2009. But as if to prove the point on Thursday, South Korea's central bank cut its key interest rate by 25 basis points to 2.75 percent. It said the move was in response to a stronger-than-than-expected deceleration in economic growth. Brazil took similar action on Wednesday, cutting its interest rate to a record low 7.25 percent.