IMF chief says action needed on global economy

The head of the International Monetary Fund on Monday called on government leaders in Europe and the United States to take urgent action in dealing with a faltering global economy.

"This time we need a sustained rebound, not a bounce," said IMF chief Christine Lagarde. "If this time is to be different, we need certainty, not uncertainty. We need decision makers to be real action takers. We need delivery."

Lagarde said the global economy was gradually recovering but that the IMF projects growth will likely be weaker than anticipated.

In a speech to the Peterson Institute for International Economics in advance of next month's annual meetings of the IMF and World Bank in Tokyo, Lagarde said, "Uncertainty in the eurozone remains the greatest risk to the global economy today.'"

She said European leaders must deliver on commitments made June 29, including establishing a single supervisory banking mechanism and enabling the direct recapitalization of banks.

Lagarde said the tepid recovery under way in the United States risks going off track if its leaders do not find a way to avoid plunging off a fiscal cliff when deep government spending cuts and tax increases take effect in January. She said this could bring about another recession and harm the global economy.

"The current uncertainty presents a serious threat to the United States and, as the world's largest economy, for the global economy," she said.

Alluding to the U.S. elections, Lagarde said, "we all hope that political clarity emerges soon, and with it, actions to avoid the fiscal cliff; and, also, a concrete plan to bring down debt gradually over the medium term."

She said countries with emerging economies, who were "a light in the darkness" and able to lead the global economy in its time of need, were now slowing down and should focus on countering vulnerabilities whether domestic or external.