WASHINGTON: IMF chief Christine Lagarde hopes the new Greek government “will hold” and that “one day” the Fund’s action in Europe, currently the target of criticism, will be appreciated, she said in an exclusive interview Thursday with AFP.
In a climate of fierce opposition to austerity measures in Europe, Lagarde said that only time will allow the merits of the International Monetary Fund’s role in the region, where it is engaged in four state bailouts, to be understood.
“It’s natural that the IMF is perceived during its intervention as negative, prescriptive and controlling because it always intervenes in a crisis situation,” she said.
She acknowledged there are certain “painful” remedies, but that the results of IMF financial programs should be judged over the long term, noting the IMF’s work during the Asian crisis in the late 1990s.
“In Asia, the countries which bitterly criticized the IMF are today grateful to have been pushed to enact reforms. I hope that one day the IMF action in Europe will be appreciated” in the same way, she said.
She voiced hopes that the recently weakened government in Greece, the epicenter of the eurozone crisis, would be able to hold up, as international creditors continue to press for reforms.
“It’s a thinner majority in parliament than they had before. I hope it will hold,” she said.
“I’m convinced that Prime Minister (Antonis) Samaras and his colleagues will be keen to support the program of Greece.”
Turning to Egypt, another country in the throes of political instability, Lagarde expressed hope for a potential IMF aid program, evoking the idea of “a long journey” with the authorities that has not reached the destination.
But she said the proposed IMF aid program — which early this year was put at $4.8 billion — would not meet the country’s needs.
“I very much hope that we can find the ground and the terms under which we can reach conclusion with the Egyptian authorities, where we have efforts on their part to address the key issues, support of the international community to participate in the financing, because the IMF financing will not be enough,” she said.
The IMF chief also discussed the recent agreement of the Group of Eight major economies to crack down on tax evasion by multinational companies.
Tax evasion “is very bad for states because it deprives them of needed revenue to combat budget deficits,” she said.
“And it’s unfair to small and medium-sized companies which do not have the means to evade taxes.