The International Monetary Fund (IMF) called on policymakers to take action to secure a solid recovery in Europe, according to the October 2009 Regional Economic Outlook for Europe released Saturday.

In the near term, policymakers should adopt a more resolute approach to assessing the balance sheet risks faced by banks, and take action to recapitalize or restructure viable institutions and resolve others, the report said.

"The economic recovery might be weaker than hoped for unless the financial sector problems are dealt with promptly and effectively," said Marek Belka, director of the IMF's European Department.

The fragility of the recovery will require fiscal policy to continue with planned stimuli and letting automatic stabilizers work, but sustainability concerns demand a strong consolidation effort once the recovery has firmed up, the regional report added.

It expected the European economic recovery would be slow and fragile as credit remains scarce, unemployment is rising, and the crisis has reduced Europe's growth potential.

"The fragility of the upswing will require policymakers' steady hand to maintain support for activity while preparing to exit from the policies put into place during the crisis. Getting its timing and the pace right will require careful judgment," Belka said.

"But, overall, moving fast to repair the damage the crisis has caused to potential growth is what ultimately matters most. Only lifting the long-run growth potential of Europe will put the crisis behind us for good," he added.

(Xinhua News Agency October 3, 2009)