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Overall, the IMF and its member countries have made progress in shoring up the international financial system, said Tharman Shanmagaratnam, chairman of the IMFC.

“All agreed we are in a better position today than we were six months today, a better position with regard to the policy footing for getting growth restarted and for achieving fiscal consolidation in advanced economies,” he said.

European Central Bank President Mario Draghi said that while the situation in the eurozone remains challenging, positives include the resilience of European banks, the relatively low level of fiscal deficits in member economies and an improvement in governance.

“The bottom line is that the situation remains challenging, but there are signs of prudent optimism,” he said.

Still, many participants expressed alarm over the risk of the U.S, the world’s biggest economy, running over a “fiscal cliff” of tax increases and deep spending cuts next year unless the Obama administration and Congress resolve a deadlock over the budget.

Such a prospect would deal a heavy blow to the economy, eroding progress made since the 2008 global crisis.

Speaking just hours after the government announced the budget deficit for the 2012 fiscal year topped $1 trillion for a fourth straight year despite stronger tax revenues, Treasury Secretary Timothy Geithner told fellow financial leaders that much remains to be done.

“It is important that we in the U.S. enact a balanced framework to bring down our fiscal deficit and debt over several years, while continuing to provide support for jobs and growth in the short term,” Geithner said.

The overwhelming emphasis of the Tokyo gathering has been on coddling fragile growth around the globe.

At Saturday’s meeting of the IMFC, which advises the IMF and monitors the world financial system, officials from developing and emerging economies urged the U.S. and European nations to prevent malaise in their regions from slowing global growth.

“Advanced countries should rethink their macroeconomic strategies and avoid simultaneous fiscal contractions and the consequent overburdening of monetary policies,” Guido Mantega, Brazil’s finance minister, told the committee.

Spending should be focused on areas that can have a maximum impact and on social safety nets to protect the poor, he said.

He also echoed other finance ministers in expressing concern over monetary easing in the U.S. and other countries that is meant to encourage more bank lending but that some worry could destabilize markets while failing to stave off recession.

The meeting ended without a breakthrough on internal reforms of the IMF, a 188-member agency set up in 1944 to provide emergency loans and other support to countries facing economic difficulties calling for reforms.

Lagarde said such reforms, which include adjusting the quotas and relative voting strength of members to reflect changes in world economic heft, are “critical” for ensuring the IMF’s legitimacy.

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