Monday 25 September 2017

IMF boss says Germany must do more to help our economy

Christine Lagarde, managing director of the International Monetary Fund
Christine Lagarde, managing director of the International Monetary Fund

Thomas Molloy Deputy Business Editor

CHRISTINE Lagarde used her first visit here as head of the IMF to tell Germany to do more to help Ireland and other countries struggling with debt.

In an interview with the Irish Independent, the managing director of the International Monetary Fund said the Irish have shown tremendous "tenacity and resilience" by sticking to the bailout programme and praised what she described as a turnaround in the economy.

"While it has been very hard there is clearly good news on the horizon," she said.

The former French finance minister said the IMF had been on the side of Ireland "through the toughest times" and would "stay available and on call" in the years ahead.

Outspoken

In some of her most outspoken comments on the policy differences between the IMF and Berlin on how best to rebuild Europe's shattered economies, Ms Lagarde said "countries like Germany" should encourage inflation and wage growth in their own economies to help countries like Ireland which would then become relatively more productive.

"This too is an aspect of pan-European solidarity," she added.

On International Women's Day, Ms Lagarde made a point of saying that she supported quotas to help women. She added that the position of Irish women was better than in some other places in the eurozone but said she was worried about salaries and participation rates.

Ms Lagarde, who has championed the cause of women in many different countries over the years, later hosted a lunch for Irish women yesterday afternoon.

She told young women to "assume that you can do just as well as everybody else, including boys. If people don't respect you or accept you, leave them to it, they don't deserve you."

During a visit that highlighted the friendly relations between the Government and the IMF, Finance Minister Michael Noonan thanked Ms Lagarde for her help when she was a finance minister and he was an "inexperienced" counterpart.

He blushed during a press conference when Ms Lagarde turned to Mr Noonan and said: "I know that this gentleman respects the views of women."

The IMF is one of the three organisations that has lent tens of billions of euro to Ireland under the bailout. While European leaders said this week that they will extend the repayment dates for much of the loans, the IMF's rules prevent it from following suit.

Despite this, the Washington-based organisation pledged to continue helping the Government to wean itself off the bailout later this year.

Ms Lagarde said alternatives are available other than simply extending loans.

Sympathy

"It is not just about extension of maturity," she said. "You can think of other devices possibly but certainly it includes the extension. We will look at it together with the other two partners in the troika."

The IMF boss urged the Government to focus on three things in the years ahead; healthcare, education and social protection.

Pressed on the suffering endured by many Irish people, the IMF boss repeatedly expressed sympathy with the suffering of ordinary people.

"There is a real risk of a fraying of social fabric, a breakdown of communities, of people losing faith in the system so we need renewed efforts to help these people find jobs," she said later in a speech in Dublin Castle.

Still, she warned that borrowing is not the answer.

Like many other outside observers, Ms Lagarde is clearly anxious about our banking sector. ECB president Mario Draghi warned this week that more needs to be done and the IMF chief took up the theme yesterday, saying that while a huge amount had been done, more was required to put the bank sector on a solid footing.

The former French finance minister said there was room for a further cut after the European Central Bank voted to keep rates at 0.75pc this week.

"Monetary policy should remain accommodative, and we believe that there is still some limited room for the ECB to cut rates further," Ms Lagarde told her audience in Dublin Castle, which included Central Bank Governor Patrick Honohan who voted on the issue in Frankfurt on Thursday.

Irish Independent

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