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IMF board to review Lagarde’s legal problems

International Monetary Fund board members will meet "as soon as possible" to review the situation of their chief Christine Lagarde, who was placed under formal investigation in Paris this week for alleged "negligence".

Published: 29 August 2014 08:34 CEST
IMF board to review Lagarde's legal problems
IMF chief Christine Lagarde's situation is to be reviewed after she was placed under investigation. Photo: AFP

"It's clearly going to be very soon, as soon as possible," said spokesman Gerry Rice at a news conference, without giving a precise date.

A Paris court placed Lagarde under formal investigation earlier this week on suspicion of "negligence" in a 2008 corruption case dating back to when she was a French finance minister.

The IMF board of executive directors, representing the global lender's 188 member states, was expected to again support the managing director, who has led the Fund since July 2011.

"The board has been briefed on this matter on a regular basis… and on each of those occasions they have expressed confidence in the ability of the managing director to effectively carry out her duty," Rice said.

The spokesman emphasized that Lagarde had said she had no intention of resigning. He added that she was back at work at the IMF and would brief the board on the matter.

"We should be careful. There are no charges that have been made against the managing director," Rice said. "There's an allegation."

In France, being placed under formal investigation is the nearest equivalent to being charged, and occurs when an examining magistrate decides there is a case to be answered.

But at this stage under French law, the judge may decide to remove Lagarde from being under investigation, and she would not face prosecution.

Lagarde said Wednesday she would appeal the court decision, saying it was "totally without merit."

The negligence allegation relates to her handling of a €400 million($527 million) state payout to disgraced French tycoon Bernard Tapie in 2008.

Lagarde referred the dispute between Tapie and partly state-owned bank Credit Lyonnais to a three-member arbitration panel that ruled in favor of Tapie and ordered the payout.

According to Rice, it is the first time in the 70-year history of the IMF that its leader has been placed under investigation by the person's native country for actions made before taking the post.

Lagarde's predecessor, French politician Dominique Strauss-Kahn, was forced to resign in 2011 following accusations he sexually assaulted a hotel maid in New York.

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ECONOMY

Italy’s economic policies will hit the poor hardest: IMF

Economic policies implemented by the populist government in Rome leave Italy's economy vulnerable to recession, with the poorest likely to suffer the most, the IMF warned.

Published: 7 February 2019 09:45 CET
Italy's economic policies will hit the poor hardest: IMF
Italy's economic policies could lead to recession, the IMF said. Photo: Andreas Solaro/AFP

“The authorities' policies could leave Italy vulnerable to a renewed loss of market confidence,” an International Monetary Fund annual report on the country said yesterday.

“Italy could then be forced into a notable fiscal contraction, pushing a weakening economy into a recession. The burden would fall disproportionately on the vulnerable,” the IMF added.

The Italian economy, the eurozone's third largest, fell into a technical recession at the end of 2018.

The fund expects the Italian economy to grow by no more than 0.6 percent this year, well below the government's own estimate of 1.0 percent.

The European Commission is tipped to lower its Italian growth forecast on Thursday, and slower growth could spell trouble for Italy, where around 20 percent of national output is swallowed up each year by payments on the public debt, the second biggest in the eurozone.

Photo: Depositphotos

The IMF report praised the coalition government's “objective to improve economic and social outcomes (as) welcome.”

But it added that the only sustainable way of achieving such goals was through “faster potential growth” that would require structural reforms, “a credible fiscal consolidation” and stronger bank balance sheets.

The coalition government of the anti-establishment Five Star Movement (M5S) and the far-right League party was forced to water down its ambitious and costly budget in December to avoid being punished by the EU Commission and financial markets.

The IMF report emphasised Wednesday that Italy “needs to tackle long-standing structural impediments to productivity growth. 

“This includes decentralising the wage bargaining regime, liberalising service markets, and improving the business climate.”

Deputy Prime Minister and M5S leader Luigi Di Maio quickly rejected the IMF report, charging that the Fund “has starved people for decades.”

The IMF, Di Maio claimed, “has no credibility to criticise a measure like the citizenship income programme,” the party's plan to introduce a welfare payment of 780 euros a month for Itay's least well-off.

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