To enjoy the full Mail & Guardian online experience: please upgrade your browser
03 Jul 2011 13:09
The International Monetary Fund’s new managing director, Christine Lagarde, will make her debut under intense pressure this coming week, as Greece’s financial woes pose an urgent challenge.
The French executive is expected to land in Washington on Monday, the Independence Day holiday for the United States. She will officially begin work on Tuesday morning and hold a press conference on Wednesday.
A “busy work agenda awaits,” declared the IMF in its internal online magazine, while it stressed one of Lagarde’s most pressing items includes the “difficult policy choices needed to help global recovery [and] address the euro area crisis.”
“The global economy is being buffeted by continued uncertainty in Europe, uprisings in the Middle East, signs of overheating in some fast-growing emerging market economies, and rising commodity prices that pose a particular challenge for low-income countries,” the publication added.
But the Greek economic crisis eclipses all other priorities.
In the immediate term, Greece is expected to receive €12-billion ($17.4-billion) from the eurozone and IMF by July 15 after the ministers approved the fifth tranche of aid from last year’s €110-billion ($160-billion) financial rescue package.
This round the IMF’s share includes €3.3-billion ($4.7-billion), according to the schedule of payments laid out in May 2010.
As part of a longer term strategy, the IMF must find a way to finance a country that in all likelihood will not be able to return to the markets for long-term borrowing in early 2012, as expected.
Holding to standards
In the Greek crisis, Lagarde transitions to the IMF zone from her eurozone duties as France’s former finance minister.
Before securing the job, she promised she would hold the eurozone countries to the same standards as other member states.
“The IMF does not belong to anybody.
It belongs to the 187 members of the Fund, and the management of the Fund does not belong to any particular nation or region.
Lagarde has said that Greeks must make difficult but necessary adjustments to restore viability in their public finance sector and competitiveness to their country.
“This is about a country’s fate, its security. And I believe at that point, we have to ignore the small and big political differences for the service of the country,” she said.
In addition she said she wants to ensure some continuity from her predecessor, Dominique Strauss-Kahn.
But the two do not hail from the same schools of thought. Strauss-Kahn is a Social Democrat while Lagarde is a “moderate liberal”.
The 2008 Nobel prize-winning economist Paul Krugman said the “serious, responsible, and judicious” Lagarde was still a mystery.
“Under Strauss-Kahn, the IMF was staking out a position as the least dogmatic, most open-minded of the major international organisations. That’s not saying too much, but it was much better than the madmen in authority at the OECD or the BIS,” Krugman wrote on his blog.
“So the question is, will the IMF become more sensible under Lagarde? For the sake of the world economy, let’s hope not.” - AFP
Create Account | Lost Your Password?