By Steven K. Beckner
TOKYO (MNI) – International Monetary Fund Managing Director
Christine Lagarde praised monetary stimulus efforts of the world’s major
central banks Thursday, but said non-monetary authorities in Europe, the
United States and elsewhere need to build on those steps to improve
growth in a slowing world economy.
Lagarde, at a press conference ahead of the annual meetings of the
IMF and World Bank, said she “expects courageous, cooperative action” at
the meetings.
She also aimed criticism at China, whose top economic policymakers
declined to attend the meetings because of territorial disputes with
host Japan. China needs to be more of a global partner and increase
demand for foreign products, not just concentrate on exporting its own
products, she said, after pointedly noting its officials’ absence.
Lagarde vowed the IMF “will spare no time and effort” to help
Greece, but said the objective is to ultimately free that country from
dependence on outside assistance.
Noting that the IMF has downgraded its projections of global
growth, Lagarde said, “we are not expecting a very strong recovery.”
Indeed, she called high unemployment rates in advanced countries
“terrifying and unacceptable.”
The Federal Reserve, the European Central Bank and the Bank of
Japan have all adopted additional easing measures, and she praised their
moves, but said that by themselves those actions are “not sufficient.”
The “momentum” imparted by monetary easing “should be seized as an
opportunity,” she said.
The euro-zone needs to take further action to strengthen its
financial sector, for instance.
It is “good news” that the European Stability Mechanism, a fund to
help heavily indebted euro-zone members in cooperation with the ECB, is
now up and operating, but she said the “bad news” is that “there will be
a legislative and often parliamentary process for the fund to work
effectively.”
There is “a trade-off between financial efficiency and democracy on
the other hand,” she observed.
And in the U.S., Lagarde said the “fiscal cliff” of automatic tax
hikes and spending cuts in January unless steps are taken to avert them,
is “becoming more threatening” as the deadline approaches.
These and other uncertainties are “hampering decisionmakers from
investing and creating jobs,” she said.
And Lagarde said the slump in the industrialized world is “having
ripple effects” in emerging markets, including Asia, although she said
Latin America is still doing well.
The IMF chief listed four categories of action that are needed
among the Fund’s 188 member nations “to lift the veil of uncertainty:”
1. complete financial sector reform;
2. “countries should deal with the legacy of high debt…. We need
credible medium-term strategies to bring down debt” from levels “not
seen except in wartime;”
3. “support job-rich growth,” and;
4. “address global imbalances.”
“What is needed most is cooperation,” Lagarde said.
China is not cooperating, she strongly implied, noting its
officials’ boycott of the annual meetings.
They “will be missing a great meeting,” she said, before implying
that China is letting down its fellow IMF member nations.
“Countries in this region are very important to the global
economy,” she continued. “All players in this region are very critical
for the global econmomy.”
“I hope the differences can be resolved harmoniously and
expeditiously so economic cooperation can continue,” she went on, adding
that cooperation “would be beneficial not only to those countries and
the Asia-Pacific region but to the global economy.”
Later, Lagarde had this advice for China: “be a partner in the
global economy… full-fledged. Focus on the domestic market, which is
clearly an engine for growth.”
Regarding Greece, LaGarde said an IMF team continues to work with
the government in Athens “to resolve any differences and to address all
chapters of the Greek program.”
“We’re at the stage of review,” she said. “Clearly we have a list
of items for fiscal consolidation puproses. We have tor review structual
reforms. We have to look at the financing and debt situation of the
country…. All four chapters have to be looked at.”
Lagarde vowed the IMF “will spare no time and effort to help
Greece.” It wants to “make sure Greece gets back on its feet and one day
return to the markets and not need constant support.”
She had praise for Japan, saying it has had “a very signifcant”
amount of reconstruction and recovery since the tsunami and associated
nuclear power disaster of early 2011.
In a separate press conference, meanwhile, World Bank President Jim
Yong Kim called recent global economic developments “sobering” and a
challenge to the Bank’s mission of fighting poverty.
Kim said the World Bank remains determined nevertheless to “bend
the arc of history” against poverty.
[TOPICS: M$U$$$,MFU$$$,MGU$$$,M$$CR$,MT$$$$,MMUFE$,M$$BR$]