KUALA LUMPUR, Feb 7: The roll-out of stimulus packages and the clean-up of banks must be accelerated, the head of the International Monetary Fund said Saturday, urging action to avert “a repeat of the Great Depression”.

IMF managing director Dominique Strauss-Kahn said stimulus measures announced so far were nearing the IMF’s goal of about 2.0 per cent of global GDP.

But the reason I’m worried is that implementation takes time, he said, citing delays in the United States caused by the political transition, and in Europe because of the EU’s political processes.

On top of that I’m worried that all this will work if, and only if, the different countries are likely to do what they have to do in terms of restructuring the banking sector, he told a press conference.

Strauss-Kahn said there were still losses in the banking sector that remained undisclosed, and that until the balance sheets are cleaned up confidence in the financial markets will not return.

Loss of confidence is now the central problem. Governments and central banks should credibly commit to measures sufficient to eliminate the risk of a repeat of the Great Depression, he said.

The IMF boss endorsed Washington’s stimulus package -- which aims to pump at least 780 billion dollars into the ailing US economy -- saying it was the “correct size” and mix.

But he added that it needed to be implemented at the same time as the restructuring of the banking sector.

Strauss-Kahn said the European Central Bank, which left interest rates unchanged this week, was more concerned about inflation than other parts of the world and there could be room for cutting interest rates.

However, measures such as cleaning-up banks could be a more effective tool for Europe than lower interest rates.—AFP