International Monetary Fund Managing Director Christine Lagarde with FOX Business Network’s (FBN) Liz Claman about today’s announcement that the IMF’s funding needs have decreased. Lagarde said the IMF needs less resources because “the risks we assessed back in early January have faded and receded a bit thanks in particular to what the ECB did with its long-term refinancing scheme.” Lagarde also addressed US Treasury Secretary Timothy Geithner’s comments that the US would not make additional contributions to the IMF and said, “I’m not expecting a check on the table. I understand what the complexities are, but there are multiple ways to support the IMF and I am sure that the US will be helping out.” She discussed whether other nations had committed to contribute, saying, “Japan is very interested.”
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“What is exactly the number? I could not tell you at the moment, but what I know for sure the risks we assessed back in early January have faded and receded a bit thanks in particular to what the ECB did with its long-term refinancing scheme which has helped countries like Italy and Spain, those banks, buy sovereign bonds to facilitate the moving of money around. Our risk assessment is certainly better than what we had in January and as a result we will need a little less resources than what we thought…We want to participate in the global firewall. The Europeans have together act together and build their own firewall, which they have. They are helping themselves for the moment, but around the world we know there are countries that are facing hardship and will come knocking at the door of the IMF to seek some help and lending.”
On whether other nations have committed to funding the IMF:
“I am encouraged. There are many members saying we want to be at the tale when it comes to raising more resources for the fund. Japan is very interested. You have lots of other countries, smaller countries, but they want to be at the table too. Mexico, Poland, Norway, Sweden.”
On US Treasury Secretary Timothy Geithner saying the US does not intend to make additional contributions to the IMF:
“I’m not expecting a check on the table. I understand what the complexities are, but there are multiple ways to support the IMF and I am sure that the US will be helping out. it is not in the interest of the institution, it’s in the interest of the entire membership including the US. The US would be hurt if the crisis was developing in Europe. The US is doing a lot for the IMF…and it will continue doing a lot. I know the multilateral spirit that was initiated in this country by the then treasury of the United States, Mr. White, together with Mr. Cains at the time, sixty years ago. This is still very much alive. It’s necessary for the US leadership.”
On whether “be at the table” means “here is a check”:
On whether Europe risks facing a lost decade:
“We need to avoid that. I don’t think they nor we can afford to have that part of the world go through a lost decade… we are all in one single big economy that talks to each other, trades with each other, moves money around. What hurts one is going to hurt others so we need to help ourselves all together.”
On what issues Europeans face:
“I think the Europeans have taken a long time to help themselves but they are now at the point where they’ve pretty much tipped all the boxes. Whether it’s the ECB, the national measures taken by Italy or Spain, whether it’s the European firewall and commitment for about $800 billion euros, they’ve done a lot. It’s not just about the euro zone…The countries that have gone through the Arab Springs that are moving in a different direction are going to need help. The cost of not doing anything for them would be much, much higher.”
Full text interview:
LIZ CLAMAN, FOX BUSINESS CORRESPONDENT: Something is showing that there is stress in those markets right now. Charles, thank you very much and we are here with managing director Christine Lagarde of the International Monetary Fund live here at the IMF headquarters. Thank you for joining us exclusively here on Fox Business.
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: It is a pleasure.
CLAMAN: We began with bond yields looking a little bit stressed in Spain and Italy, but first I would like to first get to the fact that you just left the Brookings Institution where you gave a speech and you very clearly said the crisis is not over yet. Now, your spring meeting is next week where everyone is expecting to say we need more firepower in the form of money. You want more money for the IMF. What is the number you are looking for, Madame Lagarde? Everyone had first thought $500 billion, now we are hearing it has been scaled back to $400 billion. Can you first clarify how much you want?
LAGARDE: I am not fixated on any particular number. What we have consistently said throughout is that we want to participate in the global firewall. And we said, first of all, the Europeans have to get their act together and they have to build their own firewall, which they have. Chancellor Merkel had said this will be done before the end of March. On the 31st of March they announced their firewall. Then it was time for us to reconvene, assess the risk situation, and move on to participate in what we regard as a necessary global firewall — not for the Euro area, although we might have to help them out. But they are helping themselves for the moment.
But around the Euro area, there is fragility and around the world we know that there are countries that are facing hardship and that will come knocking at the door at the IMF to seek some help and some lending. So, what exactly is a number? I could not tell you at the moment. I know for sure that the risk we assessed back in early January have abated and have receded a bit, thanks in particular to what the ECB did with its long-term refinancing scheme, which has helped countries like Italy, like Spain, for instance, buy sovereign — those banks buy sovereign bonds in order to facilitate a little bit, the moving of money around.
So our risk assessment is certainly better than what we had in January and as a result, we will need probably a little less resources than what we had thought back in January.
CLAMAN: You used the word firewall just a few seconds ago. You said that the Europeans did build that. However, Tuesday, Spanish