Lagarde Hits Triple C in Reenergized Agenda for IMF

Global recovery remains uneven, with unemployment too high in some advanced economies

IMF must keep track of growing interconnectedness of global economy

Lagarde wants to see improved governance, diversity at the Fund

The world faced problems of mounting sovereign debt in some advanced economies, while emerging markets faced the risk of overheating and possible inflation that was also threatening some low-income countries.

“We are facing a landscape that is in better shape than two years ago, but clearly with an uneven process of recovery,” said Lagarde, who took up her new job on July 5.

The former French finance minister outlined three categories of issues facing the IMF and the global economy and two sets of issues to enhance the effectiveness and operations of the Fund. The three external issues each begin with “C”:

• Connectiveness: The IMF must keep track of the growing interconnectedness of the global economy and warn about possible spillovers from one economy to another. “We have seen during the crisis that all countries, all sectors, industries, services, finance were highly connected with each other, and amongst themselves. And, we need to address that interconnectiveness.”

• Credibility: For the Fund to be credible, its analysis and work needs to be candid, credible, and evenhanded. “There is no one category of country that deserves special treatment, and another one that will receive harsh treatment. ‘Evenhandedness,’ ‘level playing fields’ are words that you will hear me say over and over.”

• Comprehensive: The IMF should look at a country’s economy not only by traditional macroeconomic measures, such as fiscal deficits. Other factors such as employment and social issues need to be taken into account as well.

The IMF should work with other international institutions, such as those that specialized in labor or trade, she said.

Turning to the way the IMF is run, Lagarde...