The International Monetary Fund (IMF) has cut its forecasts for the global economic recovery during the upcoming period and said that the global economy will be in a severe phase if the European Leaders fail to control the financial crisis that threat the recovery cycle.

Moreover, IMF indicated that the European board will want to reduce interest rates if the downside risks persist and the Italian government needs to implement its plans on fiscal consolidation as well as embark on structural reforms to boost growth.

IMF last week urged global policy makers to find collective resolve as investors worry Greece may default and European banks will be forced to take losses on bonds sold by the region's most indebted countries.