INTERVIEW - IMF unsure if financial crisis is past worst

By Alan Wheatley, China Economics Editor

TOYAKO, Japan (Reuters) - It is hard to know how far the global financial crisis still has to run, with the extent of further credit losses hinging on what happens to the U.S. housing sector, IMF chief Dominique Strauss-Kahn said on Wednesday.

A further decline in house prices would lead to fresh write-offs at banks and insurers. On the other hand, some say markets have already discounted further losses, he told Reuters.

"It's very difficult to say if the biggest part of the financial crisis is already behind us or not. What is sure is that the consequences for the real (economy) sector of the financial crisis are still in front of us," Strauss-Kahn, the International Monetary Fund's managing director, said.

Speaking on the sidelines of the annual Group of Eight summit in northern Japan, he said the time for countries to use fiscal policy to support growth had passed.

Strauss-Kahn raised eyebrows in February when, defying IMF policy orthodoxy, he urged governments to cushion the impact of the credit crisis by spending more or cutting taxes.

Some countries, notably the United States, had duly responded with fiscal stimulus, and there was still a need for developing countries to give targeted handouts to poor people hit by surging oil and food prices, he said.

"But the time when support for growth could partly come from fiscal policy is probably already behind us," he added.

Turning to exchange rates, Strauss-Kahn reaffirmed the IMF's view that the dollar is close to its medium-term equilibrium value when measured against a basket of currencies of America's trading partners and adjusted for inflation.