Lagarde: Global recovery hinges on IMF reforms
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Without U.S. support for reforms of institutions like the International Monetary Fund, global recovery from the financial crisis will likely continue at an unacceptably slow place, the head of the IMF says.
In an interview with PBS NewsHour’s Judy Woodruff on Wednesday, Christine Lagarde, the managing director of the IMF, discussed the decision by lawmakers to pass an aid package to Ukraine but dropped sections of legislation regarding IMF reforms that would “make a bit more space for China,” as Lagarde says. The failed provisions were supported by both the Treasury Department and Lagarde (prompting this op-ed written by Lagarde in the Wall Street Journal in late March), but raised the ire of Republicans and Democrats in Washington, including Speaker of the House John Boehner.
The IMF will release a revised version of its global economic outlook next week, which is expected to show a slight upward trend in activity, but Lagarde says that even talk of global reforms, such as sanctions on Russia in response to activities in Ukraine and Crimea, points to the continued powerful role of U.S. involvement:
Delays in implementing IMF-suggested governmental reforms in countries such as Ukraine will result in global economic growth slowing down in kind, she noted.
“The U.S. was one of the founding partner[s] of the IMF, and it is the leading shareholder of the institution. No matter what is said, the United States will keep its veto right over decisions that are made in this institution. So to make a bit more space for China or for the emerging market economies is only representative of where the world is going. And we have to be the institution of the future or serve international cooperation with the constant solid leadership of the United States of America. Not exercising that leadership is a mistake.”
Whether U.S. lawmakers agree with Lagarde that supporting IMF-suggested policy is or is not an act of leadership is up for debate.
Lagarde continues her public speaking tour prior to the IMF’s latest outlook on Thursday, April 3 at the Women in the World conference, which you can watch here.