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IMF

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".

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

Make reforms while sun shines on world economy: Lagarde

International Monetary Fund chief Christine Lagarde has urged France and other countries to push through reforms "while the sun is shining" on the global economy.

Make reforms while sun shines on world economy: Lagarde
International Monetary Fund chief Christine Lagarde. Photo: AFP

In an interview with France's Le Journal du Dimanche published on Sunday Lagarde said the strength of the global economic recovery had taken the IMF by surprise.

“In 2017, for the first time in a long time, we revised our growth forecasts upwards whereas previously we used to lower them,” she said.

Global growth of 3.6 percent was both “stronger and more widely shared” in 2017, she said, noting that developed economies were now growing again under their own steam and no longer merely being pulled along by demand in emerging markets.

Lagarde said the favourable climate lent itself to implementing reforms.

“When the sun is shining you should take advantage to fix the roof,” she said, using one of her favourite maxims.

This year's global growth is on a par with the average of the two decades leading up to the global financial crisis of 2007-2008.

The IMF has forecast a further slight improvement in 2018, to 3.7 percent.

In Lagarde's native France, seen for years as one of Europe's weak links, the recovery kicked in in earnest this year.

From 1.1 percent in 2016, growth is expected to rise to 1.9 percent in 2017 — still short of the 2.4 percent forecast for the eurozone as a whole but better than the 1.6 percent initially forecast in the eurozone's second-largest economy.

Centrist President Emmanuel Macron aims to consolidate the momentum and bring down stubbornly high unemployment with an ambitious programme of labour, tax and welfare reforms.

Lagarde said the changes were key to boosting France's credibility at a time when Macron is pushing for reforms at the European level, including closer integration among eurozone members.

The managing director of the IMF was France's finance minister in 2008, when the euro looked to be in serious jeopardy.

Nearly 10 years later, the currency is out of the woods.

But, Lagarde warned, “the mission has not been accomplished — and maybe never will — because Europe is not united on moving towards greater integration while maintaining national sovereignty.”