The head of the International Monetary Fund says that Russia, the world’s largest oil producer, needs to reduce its reliance on oil revenues and diversify its economy to keep it stable.

The IMF’s managing director, Christine Lagarde, said Tuesday in Moscow that even though Russia has enacted fiscal reforms in recent years, it still faces “important vulnerabilities.” She said the country’s budget deficit, excluding oil revenues, has more than tripled, and that Russia needs to move “toward a more vibrant and diversified economy.”

Russia defaulted on its debts and devalued its currency in 1998, when faced with an economic crisis that was blamed in part on falling oil prices.

Lagarde said Russia needs to create “a more welcoming investment climate” that will require more structural economic reforms. She said changes in its economy would give Russia longer-lasting economic growth and create enough jobs for its population.

Lagarde said that even though European leaders adopted a plan last month to help resolve the continent’s debt crisis, “the world is suffering from a collective crisis of confidence.” She said that if the crisis is not contained, emerging economies adjacent to the 17-nation bloc that uses the euro currency, including Russia, would be “severely hit” by lower exports and new financial strains.

She said the region “must get prepared for any potential storms” and that there is “no room for complacency. The stakes are very high.”