The International Monetary Fund should offer recommendations for national policies that spur excessive flows of capital into other economies as well as policies that seek to temper them, the IMF's steering committee said on Saturday.

Giving due regard to country-specific circumstances and the benefits of financial integration, such an approach should encompass recommendations for both policies that give rise to outward capital flows and the management of inflows, the panel of IMF member nations said in a communique.

The International Monetary and Financial Committee, a group of finance officials from around the world, said the global economy was strengthening but that policy action was needed given significant risks threatening the recovery.

Credible actions are needed to accelerate progress in addressing challenges to financial stability and sovereign debt sustainability, and to ensure timely fiscal consolidation in advanced economies, it said.

It also said steps were needed to prevent an inflationary overheating of emerging market economies and to deal with risks posed by higher commodity prices.

The IMF steering committee also called for further work toward widening the basket of currencies that compose the fund's accounting unit, the Special Drawing Right.

Leading world economies have been working on a plan to include the Chinese yuan in the SDR basket. Progress, however, has been slow, in part because of China's policy of keeping the yuan on a tight leash. SDR currencies are supposed to be freely usable.

(Reporting by Reuters IMF/G20 team; Writing by Tim Ahmann; Editing by Leslie Adler)