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IMF nudges Europe towards fundamental reforms

IMF warned that, if governments don't introduce budget cuts, market confidence in the eurozone will

In a hard-hitting report, the International Monetary Fund (IMF) has asked European countries to act decisively and implement fundamental reforms, to recover from the financial crisis and ensure economic stability.

The international lender warned that unless government finances were brought to shape through budget cuts, market confidence in the eurozone may be eroded. It added that drastic reforms were needed to secure the future of the European monetary union.

Attributing the current economic crisis to unsustainable fiscal policies and weak governance of the euro, the IMF said present efforts to fend it off are a poor substitute for overhauling the financial system from the bottom up and strengthening economic governance in the region.

It suggested that Brussels should exercise more control over national budgets of the European countries.

The IMF's advice coincided with eurozone finance ministers approving a plan for a €750bn emergency rescue fund for loans to debt-ridden governments, and the creation of a buffer-fund for those countries who cannot pay back their borrowings.