WSJ: IMF Chief: 'Black Swans' Still Haunt Global Finance

BUSINESS|APRIL 4, 2011, 8:46 P.M. ET
IMF Chief: 'Black Swans' Still Haunt Global Finance

By IAN TALLEY

WASHINGTON—The global economic recovery is still fragile, uneven and "beset by great uncertainty," the head of the International Monetary Fund said late Monday.

Growth in rich countries is too low and unemployment too high, Europe's piecemeal approach to resolving its sovereign debt and growth crisis is aggravating its problems and high commodity prices amid lower revenues and investment is threatening to undermine economic restructuring in the Middle East, Dominique Strauss-Kahn said in remarks to George WashingtonUniversity students.

"Great uncertainty still prevails," Mr. Strauss-Kahn said. "Indeed, numerous black swans are now swimming in the global economic lake."

His comments come ahead of spring meetings of the IMF, the World Bank and finance ministers of the Group of 20 largest industrialized and developing nations next week in Washington.

Among the highest priorities the G-20 and the IMF plan to tackle include how to level growing imbalances in the global economy, effective ways to manage massive international capital flows that risk overheating emerging countries and the potential impact of Japan's catastrophe and political turmoil in the Middle East.

Mr. Strauss-Kahn said he was concerned that cooperating seen at the peak of the financial crises was waning, saying he's worried that political coordination necessary to address the world's economic problems "will not be sustained."

He added that the the IMF is not seeking to restructure Greece's debt, responding to a media report saying the fund thought restructuring is necessary. "I want to deny this," Mr. Strauss-Kahn said. "We are supporting the Greek government in its position that it doesn't want a restructuring of the debt."

Restructuring—paying debt holders a fraction of the original value of their loans—would in no way solve Greece's biggest problem: competitiveness, Mr. Strauss-Kahn said.

The joint European Union-IMF bailout "tries to put back Greece on track as soon as possible without the need of any kind of default," he said.

A report in Germany's Der Spiegel magazine over the weekend said that senior IMF officials believe Greek debt restructuring is necessary, and that they have spoken with European government representatives in recent days to push for rapid action.

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