'My primary message is that additional - and vigorous - policy action will be needed in order to avoid a serious global downturn,' said Mr John Lipsky, IMF deputy managing director, at a speech to the Council for Foreign Relations in New York.

The measures needed to avoid a global downturn should aim at stabilising the financial systems of developed countries and supporting fiscal spending, through monetary and budgetary measures, he said according to the prepared text.

The IMF number-two official recalled that the multilateral institution had called for ambitious economic stimulus plans, marshaling financial firepower of at least 2.0 per cent of economic output by each country.

'We would recommend that some major countries add significantly more than 2.0 per cent of GDP (gross domestic product) in fiscal spending, because others are not in a position to contribute at all,' he said, without elaborating.

Mr Lipsky said the measures taken to date in the global financial crisis remain scattershot. To be effective, he said, government measures should support liquidity, recapitalisation and the removal of toxic assets from balance sheets.

'Measured by this triple standard, however, virtually all of the policy initiatives implemented thus far to underpin financial market functionality have tended to be partial, rather than comprehensive,' he said.

'Thus, it is not surprising that the downturn in credit growth here and abroad shows no sign of ending. Redoubled efforts across the board will be required if the develeraging is to be contained without creating substantial further damage to the financial system and to the global economy.'

Mr Lipsky said the IMF would scale back its global economic growth forecast 'notably' in its January update of the World Economic Outlook report.

In November, the 185-nation institution reduced its 2009 global growth forecast by 0.8 percentage point to 2.2 per cent and projected that advanced economies would contract next year for the first time since World War II. -- AFP