Pull coordinated policy levers to tackle 'New Mediocre': IMF chief (2)

COORDINATED POLICY EFFORTS

On potential pathways to realize the Free Trade Area of the Asia-Pacific (FTAAP), Lagarde said various trade mechanisms are flourishing at the moment, "and we are generally supportive of anything that improves and develops free trade between countries, between companies, and between regions, with one caveat -- those trade arrangements, whether bilateral or regional, should not impede or run counter to global multilateral trade efforts."

"So we are supportive as long as you can reconcile them and they are compatible," she added.

Infrastructure projects are critical for many countries, whether they are public financed or use pubic money to leverage private funding through public-private partnerships (PPPs). If efficiently designed and implemented, they can respond to the medium-term needs of economies, raise growth potential, and stimulate short-term demand by using the construction sector as a driver for growth, Lagarde said.

When asked about the newly-initiated Asian Infrastructure Investment Bank (AIIB), she said: "We are generally positive about these developments because they can help to spur growth and jobs. We see the multiplicity of actors, agencies and purposes as positive -- but again, as long as they are efficient and well coordinated."

IMF REFORM, ACHIEVEMENTS, BELLY DANCE

Lagarde, who took the helm of the IMF in July 2011 when her predecessor Dominique Strauss-Kahn was involved in an alleged sexual assault earlier that year, said that after more than three years into the powerful position, her achievements were the result of "collective efforts by IMF staff. We are a team."

She added that her main objective had been to help "strengthen the institution, make it more relevant, more client-oriented than before, and more demand-driven while continuing to be true to our mission."

However, she admitted completing the quota and governance reform package that the IMF's Board of Governors approved in Dec. 2010 was still an uphill battle.

The package includes a doubling of IMF quotas; a shift in quotas to dynamic emerging markets and under-represented countries; and a proposed amendment to reform the Executive Board that would facilitate a move to a more representative and all-elected executive board. The Congress of the United States, the IMF's largest shareholder, has become the major stumbling block for the reform.

"I have said before that I would even belly dance if that's what it might take to get the United States to ratify," she said.

"I understand that it is a key objective for the U.S. authorities. I hope that in the near term every effort can be made to achieve the ratification of the governance and quota reform, so that there is a better representation of the emerging economies including China," she explained.

"Until then, I will work on preparing my belly dance!" she said.