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IMF's Lagarde on Panama Papers, Greece default risk, refugee crisis & more

the global conversation

IMF's Lagarde on Panama Papers, Greece default risk, refugee crisis & more


There does not appear to be much to smile about when it comes to the global economy these days: new massive tax evasion scandal; Europe’s continuing economic woes, now exacerbated by migrant and terrorism crises; and slowing emerging markets.

Who is Christine Lagarde ?

  • Managing director of the International Monetary Fund (IMF) since 2011, elected for a second term in February 2016
  • First woman to serve as French Finance Minister (2007-11), first female finance minister in the G8
  • Named 5th most powerful woman in the world by Forbes (2014) and best finance minister in Europe by the Financial Times (2009)
  • Facing trial, accused of negligence over a government payment to businessman Bernard Tapie – allegations she denies
  • Member of the French national synchronised swimming team in her teens

To discuss these issues and more, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), joined euronews’ Isabelle Kumar on the Global Conversation.

Isabelle Kumar, euronews “It does seem like the rich are destined to get richer. Despite all the talk of clamping down on illegal tax havens, we now have the Panama Papers scandal, which allegedly involves some of the world’s most influential people. Do you think this scandal, these leaks, are going to change anything?”

Christine Lagarde, Managing Director, International Monetary Fund (IMF): “Well, they better change things, because they only go to show that the initial work that was started back in 2010/2011, under the French presidency of the G20 for that matter, is not mission accomplished – far from it – and a lot more work needs to be done and it needs to be constantly upgraded and continued because there is no limit to imagination by some.

Isabelle Kumar: “Is it the tip of the iceberg?”

Christine Lagarde: “That I don’t know. Clearly, the investigators will have to continue their work to identify what is legal from what is illegal, and decide where the balance should fall and whether changes are needed. But there is clearly more work to be done.”

Economics of migration

Isabelle Kumar: “Meanwhile, while people are getting richer, Europe is struggling with its economic crisis and, most recently, is facing the major challenge of the migration crisis. If we look at this in purely economic terms, do you see migration as a benefit or a burden to the European economy?”

Christine Lagarde: “We have done some really serious work studying the impact of the refugee crisis and the flow of refugees to some of the European countries. It is clear that if the right measures are taken to integrate them – by way of language skills, by way of labour skills, by way of housing support – it is a net positive for those countries that host the refugees. It’s first and foremost a humanitarian and humanistic imperative. And I really want to salute (German) Chancellor (Angela) Merkel for the courage that she has demonstrated in this instance. It is respected around the world, history will remember what the German people have done and are doing.”

Isabelle Kumar: “We are here in Frankfurt, which is the home of the European Central Bank (ECB). And if we continue looking at the European crisis, ECB President Mario Draghi has said he is going to fire everything he can at this crisis to get Europe back on track, but we can’t help but get the impression that he is running out of ammunition.”

Christine Lagarde: “We don’t think that Central Banks are running out ammunition. What we believe is that they cannot do that on their own. Kickstarting economies, improving growth, having a real solid recovery will not be achieved by monetary policies alone. It will require the monetary policies, but it will also need structural reforms, it will require fiscal measures. And it is the three together that will actually help restore the economic situation of the European Union and particularly the euro area because you talk of monetary policies. This is imperative.”

Greek drama

Isabelle Kumar: “In terms of trying to achieve more, if we look at Greece, Greece seems to be trouble again and there have been leaks that the IMF has said that bringing Greece to the brink might help push negotiations through. I know you have said that is nonsense, but how close are you to an agreement because it seems pretty far off?”

Christine Lagarde: “I have repeatedly said we need a programme for that country that adds up, that reaches the objective of restoring economic stability and where debt is sustainable in the long run and those three parameters are still there, as alive as ever. Work has been done, progress has been made, but there is a lot more work that needs to be continued and sustained, so that we are not in the realm of quick fix to pretend, but real reforms that will sustain and will support the Greek population in the long term.”

Isabelle Kumar: “And if those reforms don’t take place what is the IMF going to do?”

Christine Lagarde: “We certainly hope that they will take place. But it needs to add up and there will be trade offs – trade offs between reforms on the one hand and debt operation on the other hand.”

Isabelle Kumar: “There has been talk that a possible default in Greece could time with Brexit, the referendum in the United Kingdom on leaving the EU. Some at the IMF have allegedly said that would a disaster. What is your take on that?”

Christine Lagarde: “What we hope is (for) is progress and removing uncertainty, so I don’t think that we should combine the two. It has never been, neither our negotiation approach nor our tactics, to aim for that at all. The other debate concerning the exit of the UK is hopeful something that will be resolved favourably for Europe, for the United Kingdom. I don’t want to interfere with the voting processes and all the rest of it, because we are doing some work a the moment to determine the economic impact of any of the two options would be.”

Isabelle Kumar: “That was my next question.”

Christine Lagarde: “I anticipated it.”

Isabelle Kumar: “So what would you think the economic impact for the EU of the UK leaving the EU?”

Christine Lagarde: “So far I don’t know because we are doing as detailed and precise independent work as we can. I have my personal views, which are irrelevant in the context of our discussion. The economic impact is something that we need to determine and we will come out in May with the outcome of that work.”

Isabelle Kumar: “So, if we skip to the other side of the pond, the US is in the throes of its election campaigning – and recently a risk analysis firm put Donald Trump in terms of threats, basically on the same level as jhadists. So in terms of the global economy, who does the global economy prefer in the White House – Donald Trump or presidential hopeful Hilary Clinton?”

Christine Lagarde: “I don’t take political views. I don’t have to face that choice because I don’t vote in the United States and even if I did I wouldn’t tell you anyway. It is for the people to determine. The IMF is engaged with countries, the IMF is serving the people. The people will decide who their political leaders will be. We have to adjust. We have one focus – it is stability, it is prosperity.”

The panda in the room

Isabelle Kumar: “The other elephant in the room is China. The IMF has been sounding the alarm bells.”

Christine Lagarde: “You should say the panda, not the elephant.”

Isabelle Kumar: “The IMF has been sounding the alarm bells on that, saying there is a risk of derailment of the global economy. How at risk are we of a 2008-style financial crisis?”

Christine Lagarde: “We are not on alarm, we are on alert. Because, as I said, the economy is growing – there is no acute crisis – but equally we see risks on the horizon that could materialise and that could compound each other. So China is clearly changing its business model. China’s growth has declined, and it’s a legitimate move considering the level of development where China is at the moment. It is a big player and it has have ripple effects around the globe. It has an impact on the Chinese supply chain. It has an impact on the price of commodities. But it is a force to work with and a country that is contributing still a significant amount of growth to the global economy.”

Isabelle Kumar: “Finally. As you carry out what is a very stressful job, you are facing a trial. You stand accused of negligence in a 400 million euro payout to French businessman Bernard Tapie. But what would like to know is – how does this affect your functions, particularly now as you have entered your second term in office?”

Christine Lagarde: “It does not affect my job at all. Lawyers are doing their job, the appeal is being lodged, and the process will take its course.”

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