WASHINGTON - With market confidence remaining fragile against the backdrop of stalling economic growth and escalating debt problems on both sides of the Atlantic Ocean, the International Monetary Fund (IMF) chief Thursday called for resolute global collective action.

In a curtain-raising speech at the Woodrow Wilson Center prior to the IMF annual meetings, IMF Managing Director Christine Lagarde said that the confidence that the world so badly needs will not return without collective resolve, as the world has entered a "dangerous new phase of the crisis."

The IMF and its sister agency World Bank are scheduled to kick off their annual meetings in late September.

"Overall, global growth is continuing, but slowing down. The advanced countries in particular are facing an anemic and bumpy recovery, with unacceptably high unemployment," added Lagarde.

A key short-run issue in advanced countries is that balance sheet pressures are knocking the wind out of the recovery, as there is too much debt in the system, she said in the speech entitled "Global economic challenges and global solutions."

"Weak growth and weak balance sheets - of governments, financial institutions, and households - are feeding negatively on each other, fueling a crisis of confidence and holding back demand, investment, and job creation," she noted.

This vicious cycle is gaining momentum and has been exacerbated by policy indecision and political dysfunction, the IMF chief cautioned.

While many advanced economies face these cold headwinds, many emerging markets are facing too much heat - inflation pressures, strong credit growth, rising and unbalanced current account deficits, she contended.

Low-income countries have been experiencing reasonable growth, but remain highly vulnerable to economic dislocation from elsewhere in the world, including from commodity price volatility, said the newly-appointed IMF head.

She warned that in this inter-connected world, economic tremors in one country can reverberate swiftly and powerfully across the globe, especially if they originate in systemic economies.

Without collective and bold action, there is a real risk that the major economies slip back instead of moving forward, she warned.

She proposed "4 R's" in four crucial policy dimensions, namely "repair, rebalance, reform and rebuild," to secure recovery and economic stability.

On the front of "repair," "we must relieve some of the balance sheet pressures that risk smothering the recovery -- on sovereigns, on households, on banks," she commented.

Reform is about laying the foundations for a more stable economic future tomorrow. Moreover, the world has not seen a rebalancing of shifting back demand from the public to the private sector to carry the load, she stressed.

Lagarde held that low-income countries need to rebuild their economic policy buffers that served them so well during the crisis, in a bid to protect themselves against future storms.