Comments from officials at IMF/World Bank meetings

WASHINGTON (Reuters) - The following are quotes from world finance officials attending spring meetings of the International Monetary Fund and World Bank in Washington.

Group of Seven finance ministers and central bankers, meeting ahead of the weekend IMF/World Bank meetings, on Friday said economic activity should begin to recover later this year. However, they said the outlook remained weak and there was a risk that the global economy may still worsen.

IMF CHIEF DOMINIQUE STRAUSS-KAHN ON 2010 STIMULUS:

"It depends a lot (on) the effectiveness of the stimulus of 2009. It's difficult to define what will be the need for 2010 before having an assessment on the result of what is done in 2009. In turn, it depends on the effort that will be made on the cleansing of the (bank) balance sheets. If what we ask... on the side of the banking sector is done, then the result of the stimulus in 2009 will be very big. And then probably what is already forecast as a stimulus for 2010 may be enough. In other cases, it will need more."

STRAUSS-KAHN ON DISAGREEMENTS ON TIMING OF EXIT STRATEGY:

"Unfortunately, it is not the Europeans on one side and the Americans on the other. That would be too easy."

"It is not so much a different strategy, it is a different appreciation of the urgency. Those who think that things are improving, and finally we have more green lights than red lights, they say it is time to think about exit strategy. Some others, more concerned by the depth of the crisis today, say OK, certainly we need to talk about exit strategy, but first let's talk about what has to be done today."

IMF'S JOHN LIPSKY ON IMF ESTIMATES OF BANK LOSSES

"Those figures refer to write-downs of assets. At the same time, banks are making profits on their current incomes. So the whole picture is much more complex to come up with a figure of what the implication is for the results of the actual banks, what they might need for recapitalization etc. What we were estimating was the write-downs from existing assets, which will be compensated, at least in part, by other activities of the bank".

IMFC CHAIRMAN YOUSSEF BOUTROS-GHALI

"We have serious problems. We are taking very serious measures, but things are beginning to look up. Carefully, cautiously, we can say there is a break in the clouds."

ECB'S CHRISTIAN NOYER ON COMPETITIVE DEVALUATIONS:

"We must avoid strategies of competitive devaluation."

"I think there is a real agreement on that... We know the Americans are totally on that line."

"I think we have not seen any, that's why I say everyone agrees."

ECB'S GUY QUADEN ON ECONOMY:

"We are still in a severe recession, but it seems that in different parts of the world including the euro zone, the slowdown has begun to moderate and after a dramatic last quarter of 2008 and a very bad first quarter of 2009 the second quarter of 2009 could be better -- let's say, less bad.

"We are not at yet at the turning point of economic activity."

QUADEN ON PROSPECTS FOR MONETARY POLICY:

"The next rendezvous for the Governing Council of the ECB is on May 7...On that occasion a new cut for our main interest rate is surely not excluded, it will probably be moderate, but it would bring our main rate to a new, historically low level.

"We will also discuss and probably decide other non-conventional measures.

"For the meeting after May -- I am a pragmatic, absolutely not a dogmatic. My own assessment of what will be most the appropriate rate and other decisions in the coming months will depend on the information I will receive.

"I think that the risks for deflation in the euro zone remain limited, but they exist and they have to be closely monitored."

ITALIAN CENTRAL BANK GOVERNOR MARIO DRAGHI ON DEFLATION:

"The risk the global economy is still facing is one of a deepening recession. In contrast with past years, there isn't a risk of inflation, but of deflation, not of a worsening of economic imbalances, but of deepening economic contraction and a risk of rising unemployment. These are short-term risks.

"Then, there are long-term risks deriving from higher public debt. We will have to tackle these long-term risks with exit strategies."

DRAGHI ON RECOVERY AND TRADE:

"It is too early to say that the worst is behind the global economy even if there is a long list of macroeconomic indicators that are less bad than before. There are not signs yet of an improvement for international trade flows."

DRAGHI ON EXIT STRATEGIES:

"We had a discussion during the IMFC breakfast on exit strategies. In particular we talked about what to do with the bank stakes owned by governments... because no-one thinks that governments could own banks forever. We talked also about the need to cut public debt, that continues to rise. And we discussed exit strategies for monetary policies. But the crisis is still going on, so it is difficult to talk about exit strategies in detail."

DRAGHI ON IMF ESTIMATES FOR BANKS LOSSES:

"IMF estimates for losses at European banks are very approximate because it is based on several complex assumptions and historical data."

CHINA CENTRAL BANK GOVERNOR ZHOU XIAOCHUAN STATEMENT:

"China will continue to carry out active fiscal policies and appropriate monetary easing in response to the crisis."

"Overall there has been no change in China's economic growth trend, and no change in China's economic strengths."

"China's economy has the confidence, the conditions and the ability to maintain stable, relatively fast growth."

BRAZILIAN FINANCE MINISTER GUIDO MANTEGA ON GLOBAL FINANCIAL SYSTEM:

"We need to increase our efforts in fiscal and monetary policies but, above all, we need to clean up the global financial system. This is a key issue."

"If the United States and other countries with fragile banks do not clean up their financial systems, this crisis will last much longer."

FRENCH ECONOMY MINISTER CHRISTINE LAGARDE ON HER BIGGEST CONCERNS ABOUT ECONOMIC RECOVERY

"Implementation, as always. I think we have the right techniques, the right tools, the right commitments, the right aspirations that growth is restored and the financial stability is back, but we need to just go about implementing and that is the collective resolve that we reaffirmed this morning. We just need to implement, that's really key."

CANADIAN FINANCE MINISTER JIM FLAHERTY ON IMF FUNDING

"There are some concerns that some countries in the G20 are not yet doing their share and we've had some discussions about that this weekend, encouraging them to do so."

When asked if Canada would consider additional funding, he said: "I would not say no to that because we will have to see how the world economy does this year. We are very concerned about what is happening in the poorest countries of the world."

FLAHERTY ON U.S. TOXIC ASSETS PLAN

"(The United States) made it clear that they're going to move forward with recapitalization of those banks that need to be recapitalized. So I appreciate that action after, let's face it, a rather long time."

"We've gone on for a long time with this toxic asset, illiquid asset, bad debt issue hanging out there without action by some countries that needed to take action."

"There are no divisions evident on that issue this weekend. There is a consensus certainly in the G7 that the toxic assets need to be identified and dealt with ... there are different ways of doing that but it needs to be done and there is no dissent on that point in the G7."

FLAHERTY ON ECONOMIC STIMULUS

"The concern is that people follow through on what we decided together (that) we all would do in the G20. For two reasons -- for economic reasons and for confidence building reasons -- we need all of these countries, including Canada, to fulfill their commitments. And we need it to happen rapidly because we are in a time where there are some hopeful indicators, we want to keep those hopeful indicators improving and multiplying."

BELGIAN FINANCE MINISTER DIDIER REYNDERS ON IMF REFORMS:

"I think that for the moment the representation around the table is attractive."

"The European countries are having to finance the fund very strongly so we have to take into account the size of each country's participation in the fund."

JAPANESE FINANCE MINISTER KAORU YOSANO ON ECONOMY:

"There are some signs among investors and consumers of improving confidence in the economic prospects. It is essential, however, that policy-makers from each country continue to take action, without complacency and in a collaborative manner, until the recovery of the functioning of the global financial markets and economic activity has been ensured."

YOSANO ON IMF REFORMS:

"In order for the fund to carry out its crisis prevention functions more effectively, it is important that it strengthen its surveillance, in particular, by focusing more on the linkage between the macro-economy and the financial markets and the soundness of the financial sector.

"We welcome the fact that significant progress has been made toward increasing the fund's financial resources through voluntary efforts by various member countries.

"In the longer term, a quota increase will be necessary to increase the fund's financial resources; thus consideration of the next review of quotas should be initiated early with the aim of completing the review by January 2011.

"It is important that the fund provide timely and effective assistance to member countries in need by making use of its strengthened financial resources.

"We welcome that progress has been made, in particular, based on the lessons that originated from the experience of the Asian financial crisis. The lending facilities reform aims at the streamlining and simplification of the fund's conditionality, including the abolition of a more flexible lending facility for crisis prevention.

"In order to ensure the legitimacy of the fund as a truly global institution, it is important to achieve diversity among the fund's management and staff members, avoiding any disproportionate representation of a few specific regions."

US TREASURY SECRETARY TIMOTHY GEITHNER ON IMF GOVERNANCE, REFORM:

"The IMF needs a more representative, responsive and accountable governance structure. This is essential to strengthening the IMF's legitimacy, ensuring that it remains at the center of the international monetary system, and reflects the realities of the 21st century.

"Much bolder action is required to realign quotas toward dynamic emerging market economies, and the next general quota review is an opportunity that must be seized. Minor adjustments around the edges are inadequate to an IMF for the 21st century.

"The composition of the Board must also better reflect the realities of the global economy, and I support reducing the size of the Board from 24 to 22 chairs by 2010 and 20 chairs by 2012, while preserving the existing number of emerging market and developing country chairs."

"The Obama Administration is moving forward quickly with legislation to implement the increased participation of the United States in the expanded and larger NAB as well as to put into effect the 2008 quota and income deal and the Fourth Amendment of the IMF Articles. We have commenced Congressional consultations on the general SDR allocation. We will do our part."

GEITHNER ON IMF'S CURRENCY SURVEILLANCE ROLE:

"The IMF needs to ensure going forward that the distribution of global demand is far better balanced. In this regard, it is also critical that the IMF exercise greater candor and clarity on exchange rate issues and follow through on the 2007 Surveillance Decision."

EUROGROUP HEAD JEAN-CLAUDE JUNCKER ON CURRENCIES:

"It's a subject that wasn't raised in the meetings but I talked to various parties and I think the situation on forex markets is relatively calm. We are satisfied with the levels."

ECB'S MARIO DRAGHI ON U.S. BANK STRESS TESTS/IMFC MEETING:

"We will have a general discussion on the issue but I don't expect we will get into details about specific banks."