THE world economy is recovering moderately but still faces challenges such as the need for medium-term fiscal consolidation, John Lipsky, the International Monetary Fund's first deputy managing director, said yesterday.

"They are mainly confident that there is a moderate recovery under way globally," he told reporters in Seoul, referring to delegates at the G20 meeting of deputy finance and central bank chiefs.

"Obviously there are risks and challenges, but things seem to be moving more or less in line with our forecast," he said, listing well-designed exit strategies and medium-term fiscal consolidation as challenges.

He said some good progress had been made in discussing changes to the IMF's board, but did not elaborate.

G20 members have pledged to reach an agreement on the issue by the time leaders meet in Seoul in November.

The United States, frustrated at Europe's refusal to share more IMF power with emerging economies, last month blocked plans that would have kept Europe's dominance over the board.

Emerging economies have called for a bigger say in international institutions such as the IMF in line with their increasing contribution to the global economy.

An Indonesian official told reporters emerging economies want more voting powers as well as a readjustment in the way global economic policy is made.

"For emerging markets, the important thing is not only the size of the increase of the quota, but the general idea of the relationship between the quota and governance of the IMF - and that needs to come in one package," said Hartadi Sarwono, deputy governor of the Indonesian central bank.

Key issues at the November 11-12 summit of G20 leaders in South Korea will also include reforming the global financial regulatory framework and plans to put the world economy on a sustainable growth path.