The biggest risks to the global economy are now in emerging markets, where private companies have racked up considerable debt amid a fifth straight year of slowing growth, the International Monetary Fund said Wednesday.

"We estimate that there is up to $3 trillion in over-borrowing in emerging markets," Jose Vinals, a top IMF official, said in presenting the body's Global Financial Stability report at its annual meeting.

He told reporters that an unprecedented lending spree has come to an end with the plunge in prices for oil, minerals and other commodities that economists attribute to China's slowdown.

The risk is that shocks from bankruptcies in the developing world's private sector, particularly in heavily commodities-dependent Latin American economies, could be amplified in global financial markets.

The worst-case scenario, said Vinals, is "a vicious cycle of fire sales and volatility."

Vinals said over-borrowing in China, where an August devaluation sent global markets reeling, amounts to nearly 25 percent of the Asian power's economic output and will need to be managed gingerly.

Seven years after the global recession, he said advanced economies still need to address remaining legacies of the crisis.

For European banks, that means getting rid of some 900 billion euros worth of bad loans that Vinals called a continuing drag on the region's economy. Once removed from balance sheets, the report estimates, two-thirds of that amount would be freed up for new lending.

Vinals, director of the IMF's Monetary and Capital Markets Department, said the fund does not yet consider it time for the U.S. Federal Reserve to raise interest rates, which have been near zero since the crisis.

"We do not see wage and price inflation having the strength that would make it necessary to increase interest rates at this stage," he said.

When the Fed does begin to raise the rates, emerging markets are expected to see further flights of capital and deeper devaluations of their currencies against the U.S. dollar.

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This version corrects the reference to Jose Vinals as an IMF official, not bank official.