Sep 21, 2009, 14:40 GMT
Washington - The International Monetary Fund on Monday said it is too early for governments to end massive bail-outs of their struggling financial sectors, but all countries need to develop clear plans for how to step back from their interventions.
The government efforts - involving hundreds of billions of dollars in loans, guarantees and takeovers of troubled banks - have succeeded in bringing the financial sector back from the brink of collapse since last September, the IMF said as it released parts of a semi- annual report on the state of global finance.
'We find some evidence that the policies are working,' said Laura Kodres, who led the crafting of the IMF's Global Financial Stability Report (GFSR). 'We're not advocating a withdrawal at this time.'
But the IMF said countries should already be spelling out their exit strategies in order to calm markets about the process when the time comes. They should coordinate a pull-back, especially of bank guarantees, to avoid some countries being nudged back into a crisis.
How and when governments should withdraw from financial markets and the wider economy will be a key topic when leaders of the Group of 20 (G20) nations hold a two-day summit starting Thursday in Pittsburgh, Pennsylvania.
The United States and China have been more reluctant to offer plans for ending huge public spending efforts to keep their economies afloat. The European Union is demanding that an exit strategy be agreed upon during the G20 summit.
The IMF's full GFSR report will be released September 30, ahead of an annual meeting of the IMF's executive board.
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