IMF slashes global debt writedown estimate by $600bn

The International Monetary Fund on Wednesday slashed its estimates for global writedowns on loans plus investments $600 billion to $3.4 trillion as the global economy grows faster than formerly expected.

However, the IMF warned that loan losses might increase due to soaring rate of unemployment.

In its half-yearly Global Financial Stability Report, the IMF said that joint efforts by governments and central banks worldwide to deal with the crisis and signs of economic recovery have helped limit the losses.

Earlier, the organization had predicted that worldwide bank losses could touch $4 trillion mark.

However, IMF further added, "Even so, credit channels are still impaired and the economic recovery is likely to be slow."

Since the start of recent recession, governments around the world have been trying hard to stimulate their economies by rising spending, while major central banks have cut interest rates to pump more money into the financial system.

The US has helped many struggling lenders such as Bank of America, Citigroup Inc. and the like via Troubled Asset Relief Program.