x Abu Dhabi, UAEMonday 24 July 2017

Lagarde says crisis in "dangerous new phase"

Euro Zone: IMF managing director Christine Lagarde urges co-ordinated action by eurozone nations to halt the currency bloc's debt crisis.

Christine Lagarde, the managing director of the IMF.
Christine Lagarde, the managing director of the IMF.

Christine Lagarde, the managing director ofthe IMF, has warned that the financial crisis is entering a "dangerous new phase" and has urged euro-zone governments to take urgent action to tackle their debt problems.

The IMF chief gave the warning last night in her first major speech in Washington since taking the top job on July 5. She called for bold action and co-ordinated steps by leaders in the euro zone to reduce debt burdens in the 17-nation single-currency bloc.

"Exactly three years after the collapse of Lehman Brothers, the economic skies look troubled and turbulent as global activity slows and downside risks increase," Mrs Lagarde said. "Without collective resolve, the confidence that the world so badly needs will not return."

The euro has fallen 4.1 per cent against the dollar to $1.3833 since the start of the month.

Finance ministers of emerging-market countries including Brazil, Russia, India and China plan to meet in Washington next week to discuss plans to assist the euro zone.

The call to action comes after the arrest in London of an alleged "rogue trader" at UBS whose unauthorised trades are said to have cost the Swiss bank US$2 billion (Dh7.34bn), causing the bank to issue a warning that it may be pushed into losses for the third quarter.

Mrs Lagarde said she welcomed a $447bn job-creation plan that Barack Obama, the US president, announced last week to stimulate the flagging American economy.

ghunter@thenational.ae