CORRECTED-OFFICIAL-INTERVIEW-IMF to revise up euro zone forecast

* IMF's Belka says to revise up euro-zone forecast

* IMF worried about sustainability of EU recovery

* Not time for ECB to start exiting from monetary easing (IMF corrects quote to in paragraph 4 to make clear revision is for euro area, not for advanced Europe)

WASHINGTON, Sept 17 - The International Monetary Fund plans to raise its economic forecasts for the euro zone in 2009 and 2010 by 0.5 percentage point but is worried about how durable the recovery will be, a senior IMF official said.

"This looks like a gradual recovery. The problem is how sustainable is it going to be?" Marek Belka, head of the IMF's European Department, told Reuters in an interview on Thursday.

In July, the IMF projected the euro zone economy would shrink by 4.8 percent this year and contract 0.3 percent in 2010. New figures will be unveiled on Oct. 1 before IMF and World Bank meetings in Istanbul.

"Looking at the recent numbers we will make a modest upward revision of the forecast for the euro area, compared to the very negative July projections," he said. "We can expect an upward revision of probably 0.5 percentage points for this year and something similar for the next year," Belka said.

"It is a very cautious view," he added.

Belka said the slow recovery was being driven by billions of dollars in fiscal stimulus, and that a turnaround would be more convincing once private consumption and investment returned.

He said the next two quarters would probably reveal very little growth in advanced Europe but that the recovery should pick up steam in the second half of next year.

Agreeing with European Central Bank President Jean-Claude Trichet, Belka said now was not the time for the ECB to begin exiting from its current supportive monetary policy, especially in the absence of an inflation threat.

"Inflation is projected not to exceed 1 percent for the foreseeable future, which is well below the ECB's definition of price stability," he said. "It implies that interest rates will stay low for a longer period. So, I don't see a case for triggering the unwinding process."

He suggested that reversing the ECB's expansionary policies and record low interest rates should be determined by the pace and strength of the economic recovery.

Belka noted that most of the ECB's emergency liquidity instruments, which were deployed to ease strains in panicked financial markets, contained a sunset clause that would automatically trigger a scaling back.

But Belka said Europe's financial sector remained fragile and more had to be done to restore the health of banks to support a recovery.

"Here we call for a more proactive approach," he said. "In Europe, losses linked to the toxic assets were much less significant. On the other hand, the slump is producing non-performing loans and potential losses.

"We've made it very clear that the authorities should be prepared to step in when necessary and to monitor closely the situation in the banking sector, and if necessary to recapitalize."

He said the IMF was refining its methods for assessing bank capital needs and potential losses, and updated figures would be released in the Global Financial Stability Report on Sept. 30.

As many advanced economies mull unwinding stimulus, Belka cautioned that Western Europe should be mindful that exiting too early would have consequences for emerging Europe, which has been particularly hard-hit by the global financial crisis.

"The fortunes and misfortunes of emerging Europe are very much dependent on the revival in advanced Europe. So, if the exit is improperly timed, then of course part of the consequences will fall on eastern Europe," he added.

Still, he said advanced economies had built up "decent" coordination methods that had worked so far.