IMF urges Eurozone to contain crisis

"The euro area must build on recent measures and act decisively on multiple fronts to achieve a successful resolution to the crisis," the IMF said in a working paper on global economic prospects and policy changes prepared for last weekend's meeting of G20 finance ministers and central bank governors in Mexico City.

Fiscal consolidation should be structured to avoid a decline in demand, and countries with fiscal space should reconsider the pace of near-term adjustment. Euro area members benefiting from global financial assistance programmes should stick to the agreed consolidation efforts, noted the document released on Thursday.

To underpin the sustainability of the common currency, "deeper financial and fiscal integration over the medium term" was critical, noted the Washington-based global lender.

The IMF suggested that European Central Bank (ECB) should take further actions, including cutting the interest rate to bolster recovery.

"The ECB's monetary policy should be highly accommodative, consistent with its mandate of ensuring price stability. This could be achieved by lowering the target policy rate, for which room exists and, as needed, further unconventional measures," said the paper prepared by economists from the IMF's Research Department.