IMF's Lagarde defends austerity ahead of crucial Greek vote

IMF's Lagarde defends austerity ahead of crucial Greek vote
By Euronews
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James Franey euronews: “Christine Lagarde, you’re the head of the IMF; You are here in Dublin, Ireland to talk about the lessons we can learn from


James Franey euronews: “Christine Lagarde, you’re the head of the IMF; You are here in Dublin, Ireland to talk about the lessons we can learn from the Irish bailout. Is Ireland really a model when you consider the social cost of what happened?

Christine Lagarde, IMF Managing Director: “If I look at the numbers, clearly the Irish recovery is quite extraordinary because when you look at growth …it is up and the highest in the eurozone. if you look at is down by almost 3 percentage points. If you look at debt; it is declining. If you look at deficit, it has been halved almost. So almost all those numbers are really solid and give the direction of a good recovery.

‘Now, there is still over 10 percent unemployment and there is still over 20 percent young people unemployed. So we are not there yet. Although Ireland is off to a good start, it still has work to do to continue that unemployment decline and that job creation. Those will be the key tests to actual and full success of the Irish recovery.

Euronews: “And there’s also three quarters of a million people living in poverty in Ireland, according to the government statistics. When you hear these kinds of stories at how how these austerity cuts have affected people’s lives, what do you feel as the public face of the IMF? There’s that terrible story of that 77-year-old pharmacist who shot himself dead in Athens because he didn’t want to leave debts for his children. What do you feel when you hear these stories?”

Christine Lagarde:“Well, just like every other human being. We feel terrible in the face of those tragedies and the misery that people feel. But equally when we have to get into a territory when a country calls for help is that they have not been able to manage the situation. They have run spending way ahead of what they could afford. they are not controlling their public finances. And the situation is very bad. So we have to go in and help the country restoring economic condition, restoring access to financing and making sure that the economy is back into job creation and not job destruction.”

Euronews: “So the mantra is: keep calm and carry on cutting. Couldn’t we have done anything differently apart from these harsh austerity measures?”

Christine Lagarde: “You know, I think in the case of Ireland there was clarity of purpose. There was focus on financial and fiscal? There was determination. There was ownership by the authorities, as well as by many people in Ireland. That they wanted to get out of the very deep financial crisis they were in. There was also extraordinary human competence to try and carry it through and deliver the results and the performance and the jobs that are being created now.”

Euronews: “Let’s talk about Greece. I know it’s a very sensitive subject. There’s an election coming up…

Christine Lagarde: “Which is the reason why I might not tell you very much about it..”

Euronews: “Well, let’s have a go anyway.”

Christine Lagarde: “We try to be respectful.”

Euronews: “I understand, but the leader of Syriza, Alexis Tspiras says he wants a huge debt write-off and what he’s going to be asking of the troika (the EU, the ECB and the IMF). Do you think he’s going to get it?”

Christine Lagarde: “I think we need to wait until Friday. See what the result of the election will be and then figure out what kind of coalition is put in place and then remind that country that it has made commitments to its European partners. To its creditors. And that’s of the structural reforms that were to be implemented to restore the situation of the Greek economy.”

‘Only very few out of what was committed has been delivered and more work needs to be done. Not for us. Not for the European partners, not for the European Parliament as Mr Schulz as indicated but for the Greek people themselves.”

Euronews: “And for some northern European banks as well.”

Christine Lagarde: “In terms of tax collection, for instance, hardly any of the benchmarks have been respected. When i said that all Greek people – including the wealthy ones – had to pay the tax, that’s what I meant. Tax collection is an objective that needs to be delivered upon.”

Euronews: “Is Greece’s debt sustainable?”

Christine Lagarde: “We’ll see about that when we continue the review work and the negotiations with the authorities, as soon as the election is over and as soon as the coalition is in place if it takes a coalition.”


Euronews: “You have no contingency plan? You have no feeling whether”…

Christine Lagarde: “If I did, I wouldn’t tell you anyway. Thanks for trying, but no.”

Euronews: “So what’s at stake…?”

Christine Lagarde: “By the way, the IMF is a contingency plan almost every day when we are called upon helping any of our members in the membership.”

Euronews: “What’s at stake in this Greek election?”


Christine Lagarde: “You know, it is like any election. It is for the people to decide democratically what they want, what they expect and what’s the future for the….”

Euronews: “The membership of the Eurozone for Greece?”

Christine Lagarde: “This is not for me to decide. It’s a matter for the euro partners and for Greece to discuss, but I have heard many comments made and I am sure you have too.”

Euronews: “What would be the consequences of a Greek exit of the eurozone? I mean, what would be the impact on the Greek economy if that did happen? I know it’s a hypothetical question, but I am just interested from your vantage point as the head of the IMF…..”

Christine Lagarde: “From a very very hypothetical question of a member exiting the eurozone, which to my knowledge is not allowed under the eurozone articles of partnership if you will, that would be a massive financial cost as a result.”


Euronews: “Let’s just move on to the world economy. What do you see as the main challenges for 2015?”

Christine Lagarde: “Growth and jobs and that’s not vastly different from what it was in 2014, except that we are concerned about the growth potential of many of the advanced economies, the United States excluded. The United States is clearly having a recovery. It is getting deeper stronger, but we are not seeing that in either the eurozone or in Japan for instance. We are seeing it in the UK, but not in….”

Euronews: “And why not in the eurozone?”

Christine Lagarde: “You know the combination of the relatively gradual and slow recapitalization over time; the fact that there is very, very low inflation going forward is clearly having an effect on growth potential and therefore on the level of confidence and you are into that sort of dangerous loop that needs to be exited from in order to restore confidence, in order to kick-start investment again and in order to restore the growth.”

Euronews: “Just one final question if I may. If I may turn to your personal career. I know like all good politicians and public officials, you are focused on the job in hand, but Mr Sarkozy.”


Christine Lagarde: “Yes, you got the answer!”

Euronews: “But Mr Sarkozy is now back in French politics. Somebody you were very close to when you served in the French government. Obviously, he is now head of the opposition UMP. If Mr Sarkozy picked up the phone and asked you to rejoin him in the French political scene, what would you say to him?”

Christine Lagarde: “I’m not going to comment on French politics because…”

Euronews: “You have no plans at all?”

Christine Lagarde: “Because this is not my task, this is not my mission, this is not my interest.”


Euronews: “You have no plans to return to French politics?”

Christine Lagarde: “ I told you, I would not respond.”

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