The world economy is recovering moderately, but it still needs medium-term fiscal consolidation, says the International Monetary Fund's first managing director, John Lipsky.

He told reporters yesterday that delegates at the meeting in South Korea of G20 deputy finance and central bank chiefs "are mainly confident that there is a moderate recovery under way globally".

"Obviously there are risks and challenges, but things seem to be moving more or less in line with our forecast," he said, listing well-designed exit strategies and medium-term fiscal consolidation as challenges. He also said there was progress in talks on changes to the IMFs executive board, but did not elaborate.

G20 members have pledged agreement by November, when leaders meet in Seoul. The US, frustrated at Europe's refusal to share more IMF power with emerging economies, last month blocked plans that preserve Europe's dominance over the IMF board. Emerging economies want to have more say.