Advanced economies must make good on pledges to tighten regulation and curtail government debt or the fragile recovery could unravel, a top European official said on Saturday.

There is a real risk that we repeat the mistakes of the past, especially if the recovery takes hold and good intentions are forgotten, European Union Economic and Monetary Affairs Commissioner Olli Rehn said in a statement to the International Monetary Fund's steering committee.

Rehn said sovereign debt problems posed a short-term risk to the world economy, while the lack of balance between countries running huge surpluses and those with deep deficits represented a medium-term trouble spot.

In Europe, he said there was reason to be moderately optimistic about the near-term outlook, with strong readings on trade and industrial production suggesting economic growth continued in the recently ended first quarter.

He cautioned, however, that domestic demand could contract again this year as high unemployment weighs on consumer spending.

Looking ahead beyond the near-term, the robustness of the economic recovery in the EU is yet to be tested, Rehn said, adding that concerns about public debt sustainability in some countries could have a stronger adverse impact on economic growth than currently assumed.

Rehn said on Friday that a rescue package for debt-stricken Greece should be ready by early May. Greece's debt troubles have served as a reminder that much of the rich world is carrying unsustainable debt burdens.

The EU's spring economic forecast will be released on May 5. He said so far, the outlook seemed broadly in line with an interim forecast given in February.

However, uncertainty remains rife and the recovery is likely to be largely reliant on global growth in the near term and held back by weak private demand further out, he said.

(Reporting by Emily Kaiser; Editing by Padraic Cassidy)

International Monetary Fund