DAR ES SALAAM // Dominique Strauss-Kahn, the head of the IMF, today warned that the world's leading economies risked jeopardising a global economic recovery next year because they were taking too long to solve the banking crisis. The organisation's managing director urged the US and European countries to tackle quickly "toxic assets" in banks after saying earlier in the week that world economies would be gripped by a "Great Recession" this year and contract below zero. "On the restructuring side things are really lagging," Mr Strauss-Kahn said after an IMF conference devoted to African economies. "I'm afraid that if it goes that way for two or three more months then recovery in 2010 will be difficult." On the US, where the new Obama administration has outlined a plan to remove bad assets from banks' balance sheets, he said: "The US needs to say exactly how they're going to do it." Mr Strauss-Kahn plans to take this message to a meeting of Group of 20 finance ministers in England tomorrow. Timothy Geithner, the US Treasury secretary, outlined on Tuesday the bank plan, but offered few details on how it would work. Since then, the US Treasury has put together a third rescue effort for Citigroup by agreeing to convert preferred shares to common equity, bolstering the bank's capital base. Mr Strauss-Kahn felt action to kick-start developed economies had been more co-ordinated and responsive although he said "there is still some room to have some more stimulus". The IMF has proposed that governments that can afford it should act together to roll out a global fiscal stimulus equivalent to about 2 per cent of world GDP or about US$1.2 trillion (Dh4.4 trillion). Currently total fiscal stimulus plans amount to about 1.5 per cent of world GDP. Mr Strauss-Kahn also said he was concerned with the spread of the global crisis to emerging market economies, hit by the sharp drop in demand and in commodity prices, and the drying up of private capital flows. He said he was concerned that large banks and corporations in emerging market economies would be unable to roll over maturing debt. Preliminary estimates by the World Bank this week show that more than 1 trillion in emerging market corporate debt and up to $3 trillion in total emerging market debt matures this year. While Mr Strauss-Kahn declined to give the IMF's estimates on rollover needs, he said: "When you look at the figures for 2009 financing needs of emerging countries and what we expect to be covered by rollover ? the gap is huge. Everyone understands we need to have a sharp increase in our resources." * with Reuters
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