Thursday 26 April 2018

IMF backs rainy day fund for Eurozone

IMF managing director Christine Lagarde, speaking in Berlin, welcomed the global economic upswing, but worried about ‘the rise of populism and the short-sighted siren call of protectionism’. Photo: AFP/Getty Images
IMF managing director Christine Lagarde, speaking in Berlin, welcomed the global economic upswing, but worried about ‘the rise of populism and the short-sighted siren call of protectionism’. Photo: AFP/Getty Images

Paul Carrel

International Monetary Fund (IMF) head Christine Lagarde has said Eurozone leaders should set up a "rainy day fund" to help cushion member states in economic downturns.

Officials in the bloc have been discussing such a fund since last year as one option for setting up a Eurozone budget or boosting fiscal capacity - an idea championed by France and to which opposition from Germany appears to be softening.

In a speech in Berlin, the Fund's managing director welcomed a "sustained and broadly shared upswing" in the global economy.

Ms Lagarde said this offered a precious window of opportunity for governments to "complete the architecture" of the Eurozone.

"There are other, forceful headwinds threatening," Ms Lagarde said. "Think of the rise of populism and the short-sighted siren call of protectionism."

Talks among Eurozone finance ministers on an additional fiscal capacity have so far brought no conclusions, partly because Germany was long without a government following an inconclusive election in September.

Leaders are likely in June to give direction to further work.

German Chancellor Angela Merkel's conservatives and the centre-left Social Democrats offered some encouragement to that process in the coalition deal they sealed last month, agreeing to support devoting specific budget funds to economic stabilisation, social convergence and structural reform in Eurozone.

Those funds - developed from the Eurozone's existing ESM bailout fund - should form the basis for a future bloc-wide "investment budget", the parties said. (Reuters)

Irish Independent

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