Christine Lagarde, the Managing Director of the International Monetary Fund, is one of the most powerful women on the planet, she can move markets and wants to rescue the global economy.
On a visit to Europe, euronews spoke to her.
Stefan Grobe, euronews: “Let me start with the global economic outlook, now that 2012 has just started. In your latest statements, you were worried about growth prospects and rising uncertainty. But recently we have seen some rather positive economic data from the United States, from Germany, from China – aren’t you a bit too pessimistic?”
“We certainly have seen for the last few days some positive signs, but it does not necessarily address all the issues that need to be addressed. We think that 2012 should be a year of healing. And for that, comprehensive solutions need to be put in place in a cooperative fashion; where, for instance, the euro partners in the euro zone, focus on growth, focus on higher firewalls and better and more integration. Where on the other hand, the United States and Japan identify medium-term credible fiscal paths that will aim at reducing deficit and turning around the debt-trajectory that is theirs at the moment.”
euronews: “Let me get to what the IMF came up with recently. The IMF is proposing to raise its lending capacity by as much as $500 billion after identifying a potential need for $1 trillion in financing in coming years. That’s an extraordinary number. What do you want to do with that money?”
“Well, it is certainly not for the pleasure of raising high numbers and playing with the big figures. We have calculated the financing needs for the next two years on a global basis in case sensible measures are taken going forward. And these total financing needs amount to two trillion dollars. The actual lending capacity that needs to be improved is half of that. And we believe that the IMF must play its part by being a partner in that operation. Hence, the additional lending capacity of $500 billion. As I said, it applies to 2012, 2013, and in the best of circumstances that money will not be needed.”
euronews: “The follow-up question, of course, is: who will fund this? The Americans have already announced that they have no intention to seek additional resources for the IMF. And even G20 leaders in Cannes last year were at odds over the issue. Euro countries have pledged up to $200 billion, but that’s not enough. So, who is going to provide the rest of these funds?”
“There is a commitment by the euro partners. I have received also indications by other (IMF) members that they will be prepared to participate in the effort. Particularly so, if the Europeans within the eurozone decide to strengthen their firewall. So we have options at the moment, discussions, negotiations, we will continue those, and certainly in the hope that the IMF can, actually, play its part as is expected by the membership and as it is called for by the articles of the Fund.
euronews: “The next G20 finance meeting will take place in Mexico in February, do you think there will be a deal by then?
“The last communiqué of the G20 leaders in Cannes actually called for the finance ministers and central bank governors to work on this increased lending capacity for the IMF. As I said, there is work ongoing, and you know, there is every expectation that significant progress can be made in the near future.”
euronews: “The US government has also said, repeatedly, that Europe, the eurozone, has the capacity to solve its problems alone. To me, that sounds that Washington doesn’t want the IMF to play a bigger role in Europe. What is your vision here, can the eurozone, can the EFSF or the ESM, erect a firewall without additional support from the IMF?”
“You see, I am the head of a multilateral institution whose mission is to participate in the stability around the world which is based on multilateral and collective action. And it is certainly our mission to participate in such a process. I am sure that the membership will come together at the end in order to actually put in place the appropriate solution. And I am also sure that the IMF will be party to that. It’s going to take members, countries, efforts, collective resolve and determination to get to that comprehensive solution. And the IMF will be party to that.”
euronews: “One last question: You will be in Davos this week for the World Economic Forum. What do you want to accomplish there? Whom do you want to meet?”
Lagarde: “Well, first of all I want to really communicate, I hope, properly the message that I have, that this is not just doom and gloom and there is a way out. There is room for the appropriate set of policies to turn the situation around. But what I’m also looking forward to in Davos is to meet all sorts of people. I very much think that in our global economy we need everyone. It’s not as if it had to be corridor thinking. We have to be open to new ideas, new models, and Davos is helping in that respect.”