WASHINGTON: In an exclusive interview with AFP at the beginning of her second five-year term leading the International Monetary Fund, Christine Lagarde expressed both worries and hopes as Britain’s vote to leave the European Union raises new risks to the global economy.
She also said the IMF needs to show more concern for the poorest and for social justice.
“The key word about this Brexit affair is uncertainty and the longer the uncertainty, the higher the risk.”
“We certainly hope that all parties, the UK as well as the European Union players, will decide to reduce and eliminate that uncertainty by giving predictability about the timeline, how long will it take? When will it start?”
On Britain’s move to cut corporate taxes to ease the impact of Brexit:
“The problem with races to the bottom is that everybody ends up at the bottom. It would be much better to avoid that competitive race in terms of corporate tax.”
On the European Union’s future:
“My optimistic approach to life tells me that Brexit could also be a catalyst that could push the EU to deepen its economic integration and deliver results for the Europeans.”
“The EU has to do a lot more to explain what it does, what it means for people…. At the same time, member states should avoid blaming the EU for everything that goes wrong. I’ve seen it myself and I might have been guilty of doing it too.”
On globalization — what the world’s financial ‘bad cop’ IMF can do:
“Globalization has done a lot of good and has lifted many people out of poverty but equally it has produced some losers, people whose job has been lost to a cheaper supply chain.”
“The losers have to be helped and the IMF will continue to pay more attention to issues like excessive inequalities, women’s empowerment, climate change, and corruption, in order to produce a decent globalization, one that not only increases the overall GDP but that also looks after those who are at risk of losing.”
On the IMF’s reticence to join Greece’s third bailout program:
“The IMF is a convenient scapegoat in Greece. We would financially engage if under a reasonable hypothesis of growth, there are serious reforms implemented, and if we conclude that the debt is sustainable. But there are other options and ‘no money’ from the IMF does not necessarily mean a bad economic outcome for Greece.”
On Hillary Clinton’s aspirations to become the first female US president:
“A woman at the White House? Hey, why not?”