IMF warns G20 off cutting economic support too fast

By Sumeet Desai and Jan Strupczewski

ST ANDREWS, Scotland (Reuters) - The International Monetary Fund warned global financial leaders on Friday not to repeat the mistakes of the Great Depression and choke off emergency support for their economies too quickly.

In a document prepared for a meeting of Group of 20 finance ministers and central bankers in Scotland and seen by Reuters, the IMF stressed the fragility of global recovery, saying it was largely dependent on government and central bank support.

"One of the key lessons from the experience of similar crises (such as the Great Depression and Japan in the 1990s) is that withdrawing policy stimulus too early can be very costly, particularly if the financial system remains vulnerable and prone to adverse shocks," the IMF paper said.

G20 meeting host and British finance minister Alistair Darling told Reuters policymakers would maintain their pledge to keep support in place until recovery was assured and also launch a new system of mutual checks to help rebalance world growth and prevent future crises.

"I think we can reach agreement on firstly making sure we don't remove support too early because the recovery is by no means established everywhere," he said.

PUTTING FLESH ON PITTSBURGH

Darling is hosting the third meeting of G20 finance ministers and central bankers this year in St Andrews, Scotland, aiming to put flesh on the bones of agreements made at a leaders' summit in Pittsburgh in September.

Since then there have been growing signs that the world is finally coming out of the deepest downturn in decades after a crisis that wiped out some of the biggest financial institutions.