At a news conference to open the IMF-World Bank Annual Meetings, IMF Managing Director Christine Lagarde urged world leaders in October to reinforce a strengthening global recovery and seize an opportunity to promote inclusive and sustainable growth.
“Our suggestion is that it is not time to be complacent. It’s time to take those policy decisions that will actually enable more people and more countries to benefit from that recovery that should be made sustainable,” said Lagarde.
Lagarde emphasized the need for growth to be inclusive and benefit all people. The Fund this week highlighted strategies to combat inequality, including progressive taxation. Lagarde was asked if such policies are simply about taxing the rich to even out income.
“I disagree with that point that you just made. That, quote-unquote, taxing the rich would be the most efficient way to reduce inequalities. I think the most efficient way to reduce inequalities would be to actually close the gender gap between men and women. And, that is a no-brainer. Whether it’s access to the labor market, whether it’s access to finance. Whether it’s the gender gap in terms of compensation, that would achieve a lot to reduce inequalities. And that applies across the world.”
Lagarde added that countries do have room to adjust tax rates.
“Given the significant drop in average tax rate in most advanced countries, increasing the higher brackets would not prejudice growth. Now, from that, any policy makers have to decide what they want to do in terms of policymaking, but there are countries where, clearly, reducing excessive inequalities would support growth,” she said.
Lagarde said the IMF stands ready to support efforts to promote sustainable growth.
“What I’ve heard from all engaged is that the international financial safety net, that is so needed, has to have the IMF as its center. We will continue to play that role and we will share experience and we will provide support when and wherever needed and whenever a country asks for it.”
Asked about how the International Monetary Fund sees the risks of a Brexit without a deal, Lagarde expressed hope that negotiations will bear fruit.
“I just cannot imagine that that would happen. For the people themselves, what does it mean? The Europeans who are based in the U.K. The British who are based and residing in the European Union. WTO does not provide for such rules. When I think of the airline industries, the landing rights in various European countries. There is so much that has been brought together between the continent and the United Kingdom that it really requires a very specific approach that will reduce the uncertainty that is damaging potential.”