'We stopped the collapse, we should avoid the relapse. It is not time to relax,' says International Monetary Fund (IMF) managing director Christine Lagarde.

Lagarde has advised Europe and the United States not to let up on their efforts to meet fiscal and reform promises because those issues are key in elminating the uncertainty that limits growth.

She specifically called on Washington to raise the debt ceiling and for Europe to tackle the debt crisis, which may translate into more fiscal tightening for many countries.

"A lot has been achieved in terms of new tools in the toolbox that the Europeans have available to fight the crisis. Yet, the firewalls have not yet proven operational. Progress needs to be made on banking union," she added in what is a reference to mechanisms such as the European Central Bank's Outright Monetary Transactions (OMT) and a single bank supervisor.

Lagarde also advised the ECB to maintain a lax monetary policy and perhaps cut rates to help the more troubled countries.

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