PARIS (MNI) – France does not have the luxury of time in reforming
its pension system because the country’s fiscal situation requires quick
action, Finance Minister Christine Lagarde said in a radio interview
Friday morning.

“We have the imperative of time,” Lagarde told France-Inter. She
said it’s “not possible” to spread out implementation of the pension
reform, whose most controversial measure is an increase in the minimum
retirement age from 60 to 62. “We have a situation of our public
finances that doesn’t allow it.”

She noted that this was true throughout Europe, where governments
are facing market pressure on sovereign debt and compelled to cut public
deficits and debt. “Every country must take rapid measures,” she said.

Lagarde also said “there is no reason to believe” that the AAA
rating on France’s debt is threatened. “Our AAA rating is stable; there
are others that are less stable,” she said.

At the same time, however, she conceded that in acting quickly to
reform the pension system and to cut governing spending more generally,
“there is of course an element of sending a message of security to the
markets — those who invest and buy the securities issued by France and
finance the activities of France.”

She said the government was acting with “courage and political
determination” to return France’s fiscal house to order.

“We are within the European priority, absolutely,” Lagarde said.
“We need to straighten out our public accounts. At the same time, we
must pursue deep reforms. And at the same we must pursue the [economic]
recovery. It’s a subtle exercise.”

Lagarde said the government must “hold the line on public spending”
and be “extremely attentive” to outlays at the regional and municipal
level and in the French territories. “Because a euro is a euro, and you
can’t just spend it in any way.”

She expressed dissatisfaction with France’s May unemployment
report, published Thursday, which showed joblessness growing by 22,600
on the month. “These are not figures that we are at all satisfied with,”
she said. “They are bad figures; we must absolutely work on them.”

Lagarde also reiterated that the government would wait until second
quarter growth figures are published in August to decide whether or not
to revise its economic growth forecast.

France’s deficit-cutting plan for the next three years has been
criticized by the European Commission, the IMF and others because it
assumes that the French economy will average growth of 2.5% per year
from 2011 to 2013 — a projection that many think is way too optimistic.

Lagarde characterized it as “ambitious but realistic.”

With regard to the upcoming G20 meeting in Toronto this weekend,
Lagarde downplayed differences of opinion between Europe, the U.S. and
Asia. “We are in agreement on the larger goals,” she said — namely,
that another financial crisis like the one recently experienced “should
not happen again.” This requires more anti-cyclical measures, she said,
particularly with regard to bank capitalization.

She defended the idea of a tax on banks, saying it was “legitimate”
for financial institutions to participate in protecting against the
risks that they create.

On the issue of economic growth versus fiscal consolidation,
Lagarde conceded there are differences between Europe and its partners.
“There we have some work to do, because we need to act a bit more
collectively, without a doubt.”

–Paris newsroom, +331-42-71-55-40; bwolfson@marketnews.com

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