(Adds comments from speech, interview)
By Lesley Wroughton
WASHINGTON, April 23 (Reuters) - IMF Managing Director Dominique Strauss-Kahn said on Thursday the global economic crisis still had "long months" to go before it was finished.
"Despite some red lights and green lights ... our belief is the crisis is far from over," Strauss-Kahn told a press conference on the eve of a regular spring meeting of the International Monetary Fund.
There are "still long months of economic distress in front of us," he said, despite some evidence of economic stability due to the impact of powerful stimulus measures undertaken by authorities. But he reiterated the IMF's forecast that the world economy would recover in the first half of next year.
"The good news is we still believe the recovery can take place in the first semester of 2010," Strauss-Kahn said.
However, he stressed this meant banks must cleanse their balance sheets of bad loans, accumulated during the U.S. housing bubble, that undermined confidence and froze credit.
"You never recover before you complete the cleaning up of the balance sheet of the financial sector," he said.
"Already a lot has been done, but not enough, not enough in old advanced economies," he said.
The United States will release stress tests of its top 19 banks on May 4 to shed light on their capital positions, and examine how they would fare in an even more severe U.S. recession. The step is a deliberate bid to restore confidence in the sector, which officials say must restart generalized lending in order to restore wider economic growth.
FIREFIGHTER
Strauss-Kahn defended the IMF's response as the world's economic firefighter to the global crisis, pointing to its increased lending to emerging market countries hit hard by both the credit crisis and the subsequent collapse in trade.
"We did what we had to do," Strauss-Kahn said.
But he said the IMF needed to become more effective in monitoring economies and sounding warning bells even if countries may not like what it has to say.
"The role of the institution is to say the truth ... in an even-handed way but also in a candid way," Strauss-Kahn added.
In a separate speech at Johns Hopkins School of Advanced International Studies, he said the Fund must not shy away from "naming and shaming" countries where appropriate.
He also acknowledged that the IMF must change its governance structure to give more influence to low-income and emerging market countries or it risked losing legitimacy.
"If we do not have legitimacy, countries will not approach us to meet their financing needs until it is to late," he said. "If we do not have legitimacy, nobody will listen to our policy advice, or take our early warnings seriously."
In an interview with Reuters Financial Television, Strauss-Kahn said governance issues would be discussed at this weekend's IMF meetings, although no decisions were likely. (Reporting by Alister Bull, Emily Kaiser and Lesley Wroughton; Editing by James Dalgleish)