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IMF

France urged to drop probe against IMF chief

The French public prosecutor's office on Tuesday requested the dismissal of a negligence case against IMF chief Christine Lagarde linked to her role in an arbitration case while she was finance minister.

France urged to drop probe against IMF chief
French public prosecutor has told investigators to drop the probe into IMF chief Christine Lagarde. Photo: AFP

If the investigating magistrates at the Law Court of the Republic (CJR) accept the recommendation, the investigation will be dropped, a source close to the case told AFP.

There was no immediate confirmation from the CJR, a special court established to try cases of ministerial misconduct.

And there was no immediate response from Lagarde's lawyer.

On August 27, the CJR formally opened an investigation into Lagarde on grounds of alleged “negligence”.

The case dates back to 2008 when she decided to allow arbitration to end a dispute between controversial French tycoon Bernard Tapie and the Credit Lyonnais bank.

At the time, she was finance minister under the government of then president Nicolas Sarkozy.

The arbitration resulted in Tapie, who had close ties to Sarkozy, being awarded a 403-million-euro payout to settle his dispute with the bank.

Lagarde's handling of the case — specifically her failure to challenge the award that was hugely beneficial to Tapie but prejudicial to the state — has seen her placed under formal investigation for “negligence”.

She has denied any wrongdoing.

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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.”