August 1, 2021

Christine Lagarde, to the Italian Government: "You have to respect the rules of the club you belong to" | Economy

Christine Lagarde, to the Italian Government: "You have to respect the rules of the club you belong to" | Economy

Lagarde began his speech with a tribute to the thousands of victims of the powerful earthquake (and subsequent tsunami) that struck the Indonesian island of Celebes two weeks ago. He did it from Bali, which had also suffered a tremor in the previous morning due to an earthquake at 158 ​​kilometers of six degrees – that of the Celebes was 7.5 – although there were no notable damages.

The head of the International Monetary Fund (IMF), which this week celebrates its annual meeting in Indonesia, spoke little about Italy, but the message was very clear.

"Our position is known. We advocate for a budget that ensures fiscal consolidation and sustainable growth. Members must respect the rules of the club to which they belong, "he said at the press conference. Then, in a talk with the columnist of the Financial Times Martin Wolf, delved into the same idea. The rules that Lagarde claimed from the two-headed government of Salvini-Di Maio include "without any doubt", as he said, the Italian commitments of budgetary discipline.

Italy has been one of the recurring themes on this island during the last days. Representatives of the IMF have shown their concern with a Budget that sets the deficit at 2.4% of GDP over the next three years, which has created tensions in the markets and a monumental anger in Brussels. Pierre Moscovici, European Commissioner for Economic Affairs, criticized the figures sent by Rome, and labeled his debt – at 130% of GDP – as "explosive".

Lagarde admitted that, for now, the concern for Italy revolves more "around what has been said than what has been done". Therefore, he asked to wait to see the concrete numbers, so that European partners can evaluate "the distance between rhetoric and real figures". In the fiscal report presented this week in Indonesia, the IMF expects the Italian public debt to fall very slowly – in 2023 it would continue at 125% of GDP-; and that the deficit continue for the next five years around 2%.

But if Italy worries, the protectionist escalation does much more. And Lagarde talked to Wolf about a fear he has. "I hope we are not victims of collective amnesia. An amnesia mixed with a fear of the future. I hope we do not forget what happened a few decades ago with protectionism, "he said. Do you mean the interwar period? Asked the columnist of the British economic newspaper. "Yes," she answered, insisting on warning against a kind of "accelerated Alzheimer's" suffered by some leaders who were not named.


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