International Monetary Fund Q&A - BBC HARDtalk

we've had a lot of feedback and questions from different parts of the world quite a lot from South America here's one question from South America which I'd like you to respond to how do you see economic development in Latin America over the next five years do you see it as a region which is going to grow it's it's a region which is being very severely affected by the low prices of commodities whether it's copper whether it's oil whether it's other Mineral Resources prices have gone down significantly now they have not all responded in the same way but clearly this sort of decade of high commodity prices and very accessible financing has faded away and some of the countries like Peru like Colombia like Mexico to a certain extent like Chile have responded well and have buffers that has helped them to resist the situation they have also had the benefit of flexible exchange rates which have absorbed part of the shock but they have been the you know prime victims of this this dual move on commodity prices and higher financing as well as lower exchange rates so not to mention the big country of Brazil which is undergoing a sort of double stress of macroeconomic nature and political nature and just very quickly on Venezuela Israel rosales from Venezuela says what do you think about the current situation in in my country and what recommendations do you at the IMF have for our crisis you know one it's difficult for us to actually make recommendations for Venezuela because we don't have the data we have not been involved in Venezuela we have not done the annual audit that we do of all countries in the membership because of lack of access so it's hard to say but we can at least you know infer from indicators from numbers that are collected or published that the situation is terrible well let's face it inflation is over a thousand percent per annum and you know basic commodities for people to have to live is not available so it's it's it's really really facing a terrible situation for the people of Venezuela and I hope there will be an outcome at some stage that is that is more positive than the current situation back to our audience here at George Washington University man let me get the microphone to you just bear with us again if you would tell us your name and your question I am sommore Wang like that you raise your concerns about that problem in China's big firms so and it's over to other markets so can you identify which countries or regions will be affect most by the spillover and also you cause entrepreneurs to do business more sustainably but we are experiencing a gradual a very slow economic recovery so enter the profit margins thinners it's a pressure do you think the entrepreneurs will feel a lot of pressure to do to pay attention to the social responsibilities thank you you know on the on the spillover effect which is you know consequences outside of China of decisions made or an economic situation that is specific to China what we are seeing is effects on a regional basis within the supply chain of China that's the sort of first category that we see and there are countries that are strongly dependent from that what we call the China supply chain others that are more diversified and which are less affected as a result of the Chinese transition multi-layered transition and as a result slowing down of its growth then beyond that you also have a sort of ripple effects if you will outside the the regional zone and the supply chain of China caused by what well caused by lower purchase of commodities around the world don't forget and I'm sure you know that well that China was a prime purchase of commodities around the world second ripple effects has to do with investments there are still some significant investment from China to the rest of the world but we're watching very closely to see whether that is also going to move an in which direction and finally one that we really saw very clearly in the in the late late August and until you know well into February on the markets because the - Chinese market of Shanghai and Shenzhen went down by a significant amount having gone up by an even more significant amount then there were spill overs across the globe at the financial market and capital market levels so what we are seeing which is fairly new is the fact that those spill overs of economic decisions that we observed certainly from advanced economies to the rest of the world are NASA are also significant from certain emerging economies to the rest of the world as well now for the entrepreneurs off you were talking about the entrepreneurs of China I certainly hope and we certainly hope that amongst the changes that are considered by the Chinese authorities will be space for entrepreneurs to thrive because for the service industries to prosper sorry for the service activity not industry to prosper China needs more entrepreneurs for those entrepreneurs to succeed they need to have confidence they need to have financing so our hope is that the capital markets of China will gain in depth in facility to access so that entrepreneurs can actually thrive as they do when they put their mind to it just we've had lots of questions from in China itself I'm one very pithy one I admire it's so simple and do give me a real pity answer in response oh yeah he says we'll China's property market crash we don't think so it's difficult to say the property market because you have the property market in the prime centers in the key cities and then you have the property markets in other corners of China where there is quite a bit of of spare and you have the residential market and you have the commercial market so if we try to aggregate all that together no we don't think it will crush and what is important in relation to China Stephen is that the stimulus to growth which is considered by the Chinese authorities is not facilitated by yet more credit because that's an area where there has to be caution and there has to be some level of restriction compared with what we have so other measures will be welcomed but not those ones all right shifting focus to Africa again a huge response from Africa I'm just going to start with Dixon Taylor from Liberia Madame Lagarde why does the IMF continue to give reports on corrupt African nations and yet nothing ever seems to happen no action is ever taken as I said to you earlier when we become aware of corrupt practices when we look at the execution of budget for instance and we see that there is that hanky-panky business that I referred to earlier or or contracts that are you know some practice ly concluded outside the realm where they belong then we call a stop we ask transparency communication of document disclosures of information and sometimes it's been painful but where we can apply pressure we do unfortunately we cannot apply pressure everywhere because it's not our mission and our job all right let's get back to our audience here cuz there's loads of hands up let's move focus to this side for a bit ma'am yet we'll try and get to you just yet in the white there we go again naming quick question thank you million agree you're from Costa Rica Latin America Latin America being the most unequal region of the well I heard you say in a couple of time that we try to stop excessive inequality where do you draw the line to define what is excessive or not and who draws that line thank you one is you correct in that Latin America and Central America were probably and maybe are today the very in the region of the world where you have the highest level of inequality but I would like to also mention that this is the region of the world where there has been the most effort recently to reduce those excessive inequalities so granted starting from a very low base but there is an effort to reduce those inequalities and whether it's the I'm sorry my Spanish is bad but there's there there are rich redistribution policies that have been put in place in particular in Brazil but also in Mexican Mexico and also in Peru and in Colombia to try to reduce that very large inequalities between the well-off and the very poor it needs to continue because that excessive inequality cannot produce sustainable growth which is needed for those countries all right let's take another one let's go over this slide now you sir yep with your thumb up let's get you me up there you go name and quick question we only have about six minutes of the managing director time left so thank you thank you very much Aloysius or do formerly of the World Bank you just Kimber from Nigeria recently what I just wondered if you have a comment on your views of the Nigerian government going to the market put African Bank World Bank etc without changing the exchange rates well I will not hide from that question Nigeria is one of those countries with huge potential fantastic youth but also a very alarming economic situation because it is very very heavily dependent on the oil resources both in terms of fiscal revenue and in terms of exports so as a result of that we have enough gone public and I've actually gone to the Senate of the of Nigeria to explain our views we believe that a more flexible exchange rate is in the interest of the Nigerian population and you know if that doesn't happen we will continue to see that dual exchange rate the official one and the non official one and putting in place those lists of products or services that are forbidden in Nigeria for import purposes cannot be a substitute to a more flexible exchange rate we're not suggesting suggesting that flexible exchange rate is the panacea in all cases but in that particular instance we believe that it would help I know it's going to be difficult and we very much hope that the Nigerian government under the leadership of President Buhari will be able to distinguish the value of moving in that direction rather than causing the circumstances that could precipitate a much more difficult decision-making process at some stage but we remain completely available to help we believe that it is doable it can be addressed because Nigeria as I said has very very strong resources and great people but the right policy mix is needed which includes in our view flexible exchange rates all right let me bring in one from our social media forum Richard Clarke asked this and it's about debt relief and we talked about debt relief in in the context of Greece but not in a wider context he says why doesn't the IMF pick and underdeveloped nation say from Africa or Asia or Central or South America and use it as a test case for debt forgiveness but that has already taken place in the past with many African countries you know we we we have seen it the official creditors have actually forgive a lot of a lot of debt I'll tell you my first experience as a finance minister was a very hard negotiation with an Ghazi who was precisely the finance minister of Nigeria and she came to negotiate the forgiveness of debt which was eventually obtained and helped that country so we have plenty of it were obscene forgiveness in the right context but it can it can work so many times I don't think that you can expect creditors to a time and again continuously forgive forgive debt because the principle of lending money is that at some stage you hope to be repaid alright okay thank you I guess that's that's a pretty fair summation let us go toward the back I don't feel I've been at the back very much there's a gentleman right at the back you know with glasses yes so you here's the microphone name and very quick question we're almost out of time hi my name is Tom Cote I'm finished as well and so they shut you off yes terrible just the word French and the microphone goes dead just kidding carry on sir so I just would like your what you think about the current situation in friends which is quite problematic with the quizzes about the labor force reform may well design earth making it more flexible and the Critias social political do you what do you think you know I'm not going to comment in depth about the situation because that's the rules of the game but we have revised down the growth forecast for France and we very strongly as an institution support solid reforms that will benefit the French people and the French economy at large and we are always here to celebrate reforms when they take place all right we've time to squeeze one more in I think so sir you over on that side with your arm up thank you hey Jose Jose Luna for Mexico and my question has to do with perhaps another one of the two biggest or three big shots currently looming in the global economy and that is basically the dollar in the US interest rate and my question is basically what is your what is your opinion what are your thoughts on the current the Federal Reserve is handling it especially since we've recently seen a a slowdown of the increase in interest rates and has the Federal Reserve at least temporarily run out of tools or can they no longer really manipulate the interest rate for their own monetary policy I certainly don't think that the Fed is running out of ways to to respond absolutely not nor are other central banks for that matter but I actually celebrate the four key points which have been advocated by Janet Yellen one is any decision has to be data dependent second decisions have to be gradual in terms of implementation a third they have to be well communicated and her fourth point which is almost implied in the first one is that the international economic situation is taken into account to the extent that it affects the domestic economy of the United States so all those four combined I think you know constitute a good solid base from which I'm sure the board under her leadership will take the right decision in due course and you know the sooner that happens the more it will tell us that the US economy is doing better which is you know in and of itself good news talking of the US and we're almost out of time but giclee I'm going to allow myself one last question Qi do you worry about the impact of a Donald Trump Ted Cruz victory on on the US and indeed world economies you know the IMF and personal company included we believe in a free world in free-market principles and properly combined with appropriate and implemented regulations so any proposals that purports to restrict trade to exclude to eliminate to build barriers is not something that we believe is conducive to stable and prosperous global economy mmm interesting answer the sunlight that might constitute an intervention in American politics no because it applies across the board to any country with which we are we have a duty as custodian of stability to comment on the economic consequences of decisions and a final a final one a very quick one I promise a very quick one from Steven Spencer in the UK would the IMF where in your power would the IMF closed all tax havens in the world oh if we could it would be fantastic okay I love the short pithy final answer from the managing director of the IMF Christine Lagarde Christine Lagarde thank you very much for answering my questions and those are our audience thank you very much indeed Thanks

Channel: BBC HARDtalk

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Keywords: BBC Hardtalk, Stephen Sackur, interview BBC, Christine Lagarde, IMF, International Monetary Fund

Id: w8QzTJzpe-E

Length: 18min 47sec (1127 seconds)

Published: Tue Apr 19 2016