Lagarde hopes Europe will ’one day’ appreciate IMF
IMF chief Christine Lagarde hopes the new Greek government “will hold” and that “one day” the Fund’s work in Europe, currently the target of criticism, will be appreciated, she said in an exclusive interview Thursday with AFP.
In a climate of fierce opposition to austerity measures in Europe, Lagarde said that only time will allow the merits of the International Monetary Fund’s role in the region, where it is engaged in four state bailouts, to be understood.
“It’s natural that the IMF is perceived during its intervention as negative, prescriptive and controlling, because it always intervenes in a crisis situation,” she said.
Lagarde acknowledged there are certain “painful” remedies, but that the results of IMF financial programs should be judged over the long term, noting the IMF’s work during the Asian crisis in the late 1990s.
“In Asia, the countries which bitterly criticised the IMF are today grateful to have been pushed to enact reforms. I hope that one day the IMF action in Europe will be appreciated” in the same way, she said.
The former French finance minister, 57, has led the global crisis lender since July 5, 2011. The fallout from the 2008 global financial crisis, the euro zone debt crisis, ultra-loose monetary policy in the United States, the risk of overheating in China -- all have come under her watch.
As for being recently named by a French court to be a special witness in the corruption investigation of tycoon Bernard Tapie, over her role at the time as finance minister, she was tightlipped.
“I am completely focused on my mission, in what I need to do as the head of the IMF,” she said in her spacious office at IMF headquarters in Washington.
Unsurprisingly Greece, the epicentre of the euro zone crisis, remains high on her agenda. Following another political crisis, the country’s government was reshuffled Monday.
Lagarde voiced hopes that the weakened government would survive, as international creditors continue to press for reforms.
“It’s a thinner majority in parliament than they had before. I hope it will hold,” said Lagarde, after having endured endless days and nights negotiating the bailout of Athens with the European Union and the European Central Bank.
“I’m convinced that Prime Minister (Antonis) Samaras and his colleagues will be keen to support the program of Greece.”
But the long-running Greek crisis has spurred dissension between the IMF and the EU. After having attended Brussels meetings of the 17-nation eurozone as French finance minister, Lagarde said she sees things differently as IMF chief.
“I understand better the difficulty of communicating because I participated in the communication of 17 voices, or 18 with the (European) Commission and 19 with the European Central Bank,” she said.
“When the same message is transmitted by 19 different people, there are distortions, there is a loss of substance, and I can see that much better on the receiving end.”
As for speculation that tensions between the IMF and the Europeans spell the end of the so-called “troika” of international lenders, Lagarde defended her institution.
“I think there is not one European official who says today, in the current programs and in the near future, that the IMF isn’t necessary,” she said.
Turning to Egypt, another country in the throes of political instability, Lagarde expressed hope for a potential IMF aid program, evoking the idea of “a long journey” with the authorities that has not reached the destination after many months of talks.
But she said the proposed IMF aid program -- put at US$4.8 billion in the negotiations that began last year -- would not meet the country’s needs.
“I very much hope that we can find the ground and the terms under which we can reach conclusion with the Egyptian authorities, where we have efforts on their part to address the key issues, support of the international community to participate in the financing, because the IMF financing will not be enough,” she said.
The IMF chief also discussed the recent agreement of the Group of Eight major economies to crack down on tax avoidance by multinational companies.
Tax avoidance “is very bad for states because it deprives them of needed revenue to combat budget deficits,” she said.
“And it’s unfair to small and medium-sized companies which do not have the means to avoid taxes.”
Traditionally, the head of the IMF does not speak about his or her home country. Lagarde did not break this custom but she was far from breaking her ties to France.
“There isn’t one day where I don’t find a link with France. It is when one is in a foreign country that one loves more our country, that one is at the same time more critical and more positive.”
Asked about a rumour that she may run in the 2017 presidential race, Lagarde said she has “zero” political ambition in France.