8 January 2012 Last updated at 11:25 GMT issues austerity warning 
Christine Lagarde said austerity was only one of the measures need to overcome the eurozone debt crisis
The International Monetary Fund has been one of those stressing the need for countries to cut their debts, but some fear this could hit growth.
The correct response to the eurozone debt crisis has been a major debate at World Economic Forum in Davos.
"We are not suggesting there should be fiscal consolidation across the board," Ms Lagarde stressed.
"Some countries have to go full-speed ahead to do this fiscal consolidation, but other countries have space and room. They should explore what to do... in order to help themselves.
"It has to be tailor-made."
One of those expressing concerns about the possible implications of fiscal consolidation at the gathering at the Swiss ski resort was US Treasury Secretary Tim Geithner.
He told the annual meeting of political and business leaders on Friday that there was a risk of a recessionary "cycle" from austerity measures.
"There is a risk that every disappointment in growth will be met with an austerity that will feed the decline, and that is a cycle you have to arrest to solve financial crises," Mr Geithner said.
'Progress' Crisis-hit countries such as Greece and Spain are implementing deep government spending cuts and raising taxes in order to try to bring down their deficits.
"For parts of Europe for a long time, there will be no alternative to very substantial adjustment in budget deficits," Mr Geithner said.
He is one of a number of leaders who have said this week that the deficit-cutting measures have been an important step in addressing the eurozone debt crisis.
"There is work under way. There is progress, as we see it," Ms Lagarde said.
But some see these policies as potentially very damaging. Financier George Soros told the BBC that the fiscal cuts, which Germany supports, could even lead to a "lost decade" of economic stagnation in Europe.
"This German insistence on austerity could destroy the European Union," he said.
"This is reality, this is the harsh reality that we need to face.
"It is not written in stone, the future is not predetermined. We determine the future, so it would be well within the possibilities of the authorities to change it."
Firewall
Plans for a "firewall", a much-expanded rescue fund made up of funds pledged by eurozone members, will be discussed at what is regarded as a crucial meeting of European leaders in Brussels on Monday.
Christine Lagarde said austerity was only one of the measures need to overcome the eurozone debt crisis Inappropriate spending cuts could "strangle" growth prospects, the head of the IMF has warned.
Austerity programmes must be tailored to each economy, Christine Lagarde said, and not be" across the board".The International Monetary Fund has been one of those stressing the need for countries to cut their debts, but some fear this could hit growth.
The correct response to the eurozone debt crisis has been a major debate at World Economic Forum in Davos.
"We are not suggesting there should be fiscal consolidation across the board," Ms Lagarde stressed.
"Some countries have to go full-speed ahead to do this fiscal consolidation, but other countries have space and room. They should explore what to do... in order to help themselves.
"It has to be tailor-made."
One of those expressing concerns about the possible implications of fiscal consolidation at the gathering at the Swiss ski resort was US Treasury Secretary Tim Geithner.
He told the annual meeting of political and business leaders on Friday that there was a risk of a recessionary "cycle" from austerity measures.
"There is a risk that every disappointment in growth will be met with an austerity that will feed the decline, and that is a cycle you have to arrest to solve financial crises," Mr Geithner said.
'Progress' Crisis-hit countries such as Greece and Spain are implementing deep government spending cuts and raising taxes in order to try to bring down their deficits.
"For parts of Europe for a long time, there will be no alternative to very substantial adjustment in budget deficits," Mr Geithner said.
He is one of a number of leaders who have said this week that the deficit-cutting measures have been an important step in addressing the eurozone debt crisis.
"There is work under way. There is progress, as we see it," Ms Lagarde said.
But some see these policies as potentially very damaging. Financier George Soros told the BBC that the fiscal cuts, which Germany supports, could even lead to a "lost decade" of economic stagnation in Europe.
"This German insistence on austerity could destroy the European Union," he said.
"This is reality, this is the harsh reality that we need to face.
"It is not written in stone, the future is not predetermined. We determine the future, so it would be well within the possibilities of the authorities to change it."
Firewall
Austerity is only one part of the solution, Christine Lagarde stressed.
"It is critical that the eurozone members actually develop a clear, simple, firewall that can operate both to limit the contagion and to provide this sort of act of trust in the eurozone so that the financing needs of that zone can actually be met." Plans for a "firewall", a much-expanded rescue fund made up of funds pledged by eurozone members, will be discussed at what is regarded as a crucial meeting of European leaders in Brussels on Monday.
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