Spread the wealth, IMF chief Christine Lagarde urges Hong Kong

PUBLISHED : Sunday, 23 February, 2014, 6:09am
UPDATED : Sunday, 23 February, 2014, 6:09am

IMF chief Christine Lagarde has urged the Hong Kong government to share the benefits of its economic growth with more of its people.

The former French finance minister said in an interview with Post Magazine that improving the economic role of women, reducing income inequality and encouraging "greener" growth would all bolster the Hong Kong economy.

The latest economic research by the 188-nation International Monetary Fund, which acts as the lender of last resort to troubled economies, found that greener and more inclusive economic activity led to more solid and sustainable economic growth, she said.

"Certainly diversification and better inclusion would not hurt Hong Kong," Lagarde said. "Our research shows that sustainable growth is better, and to actually feed sustainability, better inclusion and less inequality are highly recommended, and obviously green growth … is an area that has to be explored, developed and endorsed by as many as possible."

While the IMF's sister organisation, the World Bank, has traditionally had responsibility for promoting "social development" policies, Lagarde said it was also appropriate for the IMF to encourage goals related to the environment, women's economic involvement and a fairer distribution of income.

"We are not the world experts in those fields but we have to establish the macroeconomic criticality of issues such as gender inclusion, such as redistribution, such as climate change," the IMF chief said.

Amid growing calls in Europe for Lagarde to leave the IMF and become the new head of the European Union's executive arm, she rejected claims she has been biased towards Europe during her two-and-a-half years running the IMF.

"I am not campaigning, I am not a candidate, I want to finish my term," she said, although she added she could not emphatically say she would complete her term because "destiny is not in my hands". Lagarde said she was concerned about claims she had been soft on countries such as Greece and the largely French and German banks that had lent them money.

"We looked at it and compared with programmes in Asia, for instance, to see whether we were asking less of the European countries … than we had negotiated with the Asian countries during the Asian crisis," she said. "And actually in terms of fiscal consolidation, we asked European countries for more than we asked the Asian countries to do. So this is a very funny perception compared with the reality of the programmes under way.

"Because of a level of development, because of a banking system, we suggested and designed the programme so it was probably denser in Asia and the hardship was felt for a period of two to three years, whereas in some of the European countries it is going to take longer because growth is picking up at a much reduced pace. So the length of the programme is longer but the volume of fiscal consolidation is higher in Europe."