UNITED NATIONS, May 17 (Xinhua) -- President of the European Union (EU) Commission Jose Manuel Barroso said here

Thursday that a solution to the global economic crisis must have a global dimension. "Economic crisis has global nature, its impact has been global and the remedies must also have a global dimension," said Barroso told the General Assembly's high-level thematic debate on The State of the World Economy and Finance and its Impact on Development, taking place at UN Headquarters in New York. Barroso, upon the invitation of the president of the General Assembly and Secretary-General Ban Kimoon, also addressed the economic issues that are affecting Greece. "We want Greece to stay in the euro area," he said. "The European Union will do all it takes to ensure it." He also said that the EU is willing to honor its commitments toward the economically troubled nation, and expect Greece to fulfill its commitment toward the financial assistance agreement with the EU. Barroso said that the "irresponsible behavior by some in the financial sector" along with oversight from many could have sparked the current global crisis, while stressing the importance of focusing on stability for the next few years. "Much has been done in these last two years to overcome the problems," he said. "In Europe we are delivering a robust response to the crisis by repairing our banking system (and) strengthening our economic governance," said Barroso. He also mentioned that member states in financial difficulty have been provided an " unprecedented solidarity" to ease their economic burden. Barroso also mentioned the "Twin Track" approach that not only focuses on the stability of the economy, but growth in the job market as well. "Reducing debt and deficit is essential to build confidence and cut borrowing costs," he said. "Every euro spent on interest payments is a euro less for jobs and investment." In addition, Barroso said that plans to boost the job market are by attracting investors in the areas of transportation, energy, as well as the digital area. As well as the EU's proposed plan for the upcoming seven years to shift their focus from spending, toward competitiveness and enhancement measures. However, Barroso said "in spite of all the difficulties, we are on the right track -- we are doing a rootand-branch reform of our budgetary and economic policies," adding that they are "making good progress in laying firm foundations for strong economic recovery and sustainable growth."

Much-needed global initiatives, such as an infrastructure plan to mobilize private savings and generate higher growth, are stillborn

The IMF has urged the Group of Twenty (G-20) industrialized and emerging market countries to take more decisive policy action to combat the corrosive global financial and economic crisis by bolstering demand and cleaning up the financial sector.

In a note prepared for a meeting of G-20 deputies in London that took place January 31-February 1, the IMF portrayed a grim outlook for the global economy, with growth in 2009 virtually grinding to a halt around the world and contracting in advanced economies. "The dramatic worsening of the financial crisis since mid-September has generated historic declines in confidence and severe disruptions in credit intermediation. The precipitous decline in activity across the globe is in turn further damaging the financial sector," the IMF said. Action so far not enough The 185-member international institution said that wide-ranging policy actions have helped avert a global financial meltdown. But it warned that risks remained substantial and world growth was at its lowest level since World War II. "The overarching risk revolves around the possibility of further corrosive interaction between more severe contraction in global economic activity and even greater and more prolonged financial strains than currently envisaged, particularly if policy implementation falls short," the IMF note, made public on February 5, said. The IMF cautioned against protectionist solutions to the crisis, saying that raising barriers to imports and subsidizing exports would undermine prospects for global recovery. The recent London meeting was in preparation for a G-20 summit in London on April 2 to assess progress with implementing an action plan drawn up in Washington last November to counter the crisis. The G-20 comprises the seven major industrialized nationsBritain, Canada, France, Italy, Japan, Germany, and the United Statesplus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey, along with the European Union. The heads of the United Nations, the IMF, the World Bank, and the Financial Stability Forum also attend the summit. No decisive breakthrough In the IMF's assessment, action taken by governments so far had not yet achieved a decisive breakthrough in reversing the crisis. "While there are pockets of improvement in some markets where policy intervention has taken place, financial markets remain under heavy strain and systemic institutions are still perceived as fragile. Challenges persist across a wide range of markets and instruments," it said. Governments around the world have cut interest rates and introduced fiscal stimulus packages to counter the downturn, triggered by the subprime mortgage crisis that erupted in the United States in mid-2007. So far, the G-20 countries have adopted or plan to adopt fiscal stimulus measures amounting to, on average, around percent of GDP in 2008, 1 percent of GDP in 2009, and about 1 percent of GDP planned for 2010. But the IMF said this would not be enough.

"More aggressive and concerted policy actions are urgently needed to resolve the crisis and establish a durable turnaround in global activity," the IMF said. To be effective, policies need to be comprehensive and internationally coordinated to limit unintended cross-border effects. The IMF's analysis showed considerable variation across G-20 countries in the size and composition of stimulus packages announced so far. Revenue measures have focused on cuts in personal income taxes and indirect taxes such as the value-added tax or excise duties, while three-quarters of the G-20 countries have announced plans to increase spending on infrastructure, mostly on transport networks. Other expenditure measures include transfers to states or local governments, support for housing sectors, and aid to small and medium-sized enterprises. Reviving the damaged financial system Restoring financial health will require a three-pronged approach, involving the continued provision of ample liquidity and term funding support from central banks, dealing promptly and aggressively with distressed assets, and recapitalizing viable institutions with public funds. Immediate, short-run policies and actions taken need to be consistent with the long-run vision for the structure of a viable financial system and with medium-term fiscal sustainability. If the financial sector is not restored to health, an enduring recovery will not be possible. Various approaches may be used to resolve distressed assets, tailored to individual institution and country circumstances. Cleaning bank balance sheetsincluding through a transparent process for valuing distressed assets and putting a ceiling on losseswill be critical to restore confidence in financial institutions and reduce counterparty risk. An approach that would ensure maximum transparency and greatly reduce uncertainty, although entailing high upfront fiscal costs, would be to transfer the assets to a "bad" bank. Such an approach has been tried and tested in previous crises and has yielded generally favorable outcomes. Recapitalization using public balance sheets should make a clear differentiation between viable and nonviable institutions to enable greater consolidation in the financial sector. Most critically, recapitalization must be of a sufficient size to decisively address solvency concerns, especially by ensuring that it is resilient to further deterioration in bank balance sheets as a result of the worsening macroeconomic environment. International cooperation on a coherent set of financial policies should receive high priority. The application of substantially different conditions when supporting financial institutions should be avoided in order to prevent unintended consequences that may arise from competitive distortions and regulatory arbitrage. International coordination is also needed to avoid excessive "national bias" to the detriment of other countries. Avoiding a prolonged recession Macroeconomic policy stimulus will be critical to support demand while financial issues are addressed and to avoid a deep and prolonged recession. With conventional monetary policy reaching its limits, central banks will need to explore alternative policy approaches with a focus on intervention to unlock key credit markets.

Because of the constraints on the effectiveness of monetary policy, fiscal policy must play a central role in supporting demand, while remaining consistent with medium-term sustainability. A key feature of a fiscal stimulus program is that it should support demand for a prolonged period of time and be applied broadly across countries with policy space to minimize crossborder leakages, the IMF argued. Policymakers need to be mindful of the importance of maintaining confidence in medium-term fiscal sustainability, the IMF said. Stimulus measures must be accompanied by credible steps to strengthen medium-term fiscal prospects. Fiscal packages should rely on temporary measures and policies should be formulated within credible medium-term fiscal frameworks. These frameworks should entail gradual fiscal corrections as conditions improve. The IMF suggested that countries facing forthcoming demographic challengesparticularly a shift to a more aged populationshould have a clear plan for reform of health and pension entitlements.