The International Monetary Fund (IMF) warned again last night that the global economic crisis was far from over, despite tentative signs of recovery.

Speaking in the run-up to the IMF's spring meeting in Washington, Dominique Strauss-Kahn, its managing director, said: “Despite some red lights and green lights ... our belief is the crisis is far from over. We have long months of economic stress in front of us.”

Mr Strauss-Kahn said that governments in Europe and America had to do more to shore up their banking systems if the crisis was to abate next year. “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.”

His warning came amid fears that trillions of dollars of government-issued paper is poised to swamp financial markets.

In London, the price of gilt-edged stock fell and yields rose as traders in government bonds felt concerned about the prospect of record gilt issuance. On Wall Street, government stock prices retreated as the Treasury announced an auction of $101 billion (£69 billion) of notes.

Barclays Capital estimates that the US Government will borrow $2.06 trillion this year, compared with $886 billion last year and $573 billion in 2007. In Britain, the absolute numbers are smaller, but the rate of escalation is equally alarming and is likely to have an even bigger impact on the much smaller market for sterling debt.

In his Budget speech on Wednesday, Alistair Darling said that government borrowing would reach £220 billion this fiscal year, more than twice last year's figure and almost four times the amount borrowed by the Government in 2007.

The unprecedented size of borrowing is raising questions about whether the market can absorb so much government stock without the need to push rates higher. HM Debt Management Office (DMO), which is in charge of gilt issuance, has never had to borrow so much before.

In the current year, the Government will be borrowing about £4 billion a week to pay its bills. However, Robert Stheeman, chief executive of the DMO, said yesterday that he did not expect problems, although he acknowledged that the cost could rise.

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