Lagarde weathers tough tests in IMF

International Monetary Fund (IMF) chief Christine Lagarde has endured a trial by fire since winning the job six months ago, from Europe’s debt crisis to a slowing global economy and is bracing for more.

Lagarde, who left her post as French finance minister to take up the IMF’s top job in early July 2011, has barely had time to unpack amid the turmoil.

The former French national synchronised swimming champion even told the Washington Post this month that she had not yet joined a local pool.

On the professional side, as the first female chief of the 187-nation crisis lender, Lagarde has hit a few bumps in her trailblazing, particularly in establishing a necessary distance from her former European colleagues.

They held similar views on July 21 after a eurozone summit in Brussels when she welcomed Europe’s hopes that Greece could seek an even bigger bailout loan from the IMF.

Now, she makes clear that is out of the question.

In August, too, she caught European officials off guard in declaring the continent’s banks “need urgent recapitalisation”.

Good defence
Her remark was roundly denounced by Brussels, London, Paris, Frankfurt, Berlin and Madrid.

“The basic act was to say that there is a banking problem. The IMF had been saying that for months in private but it wasn’t understood,” a source close to the IMF said.

That, too, has changed.

Catching her stride, Lagarde has become one of the most outspoken voices on the problems of the 17-nation eurozone.

She criticised the agreement reached at an EU summit on December 9 to contain the crisis as “not detailed enough on the financial aspects and too complicated on the fundamental principles”.

And she warned at a Washington forum this month that no economy in the world is “immune to the crisis that we see not only unfolding, but escalating”.

While that language does not please her former colleagues in Europe, Lagarde is seen as better defending the IMF’s interests.

‘Capable staff’
“She has been tougher on Europe than Dominique Strauss-Kahn,” her predecessor who abruptly resigned amid sexual assault charges, said Claudio Loser, a former director of the IMF’s Americas department.

Since her arrival at the IMF, “she’s done well, surrounded by a very capable staff,” he said.

In Washington, the 55-year-old lawyer by training, has built a reputation for diligence and leadership while her frankness and pragmatism attract admiration.

She was listed among the “best-dressed” personalities in Vanity Fair magazine, was portrayed doing yoga at her US home by Paris Match and was trailed in a Parisian market by US television network CBS.

“I think she’s done a wonderful job. With the European crisis, circumstances required the IMF to be a background supporter rather than an upfront leader. That’s what happened,” said Colin Bradford, an economist at the Peterson Institute for International Economics.

“She’s been an efficient leader. Someone serious, very cautious in her statements,” he said.

Though Lagarde is not an economist herself, many economists acknowledge she has intellectual flexibility and the ability to synthesise different points of view.

But her personal beliefs remain a mystery.

In August, on the question of striking the right balance between fiscal austerity and economic stimulus — an issue bedevilling many struggling eurozone economies — she wrote: “Fiscal adjustment must resolve the conundrum of being neither too fast nor too slow.”

Loser said the IMF chief is “not ready to say to the leader of a country that he has to do austerity”.

Lagarde also finesses the delicate question of boosting the IMF’s financial resources by saying it depends on the circumstances.

“She’s giving the general idea, not the exact numbers,” Loser noted. — AFP

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