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IMF's Lagarde: World Economy Entered Dangerous New Phase — But ‘There is a Way Out’

Thursday, 15 Sep 2011 | 1:35 PM ET
This post was written by Donna Burton and Lulu Chiang
Christine Lagarde, managing director of the International Monetary Fund (IMF)
Bloomberg | Getty Images
Christine Lagarde, managing director of the International Monetary Fund (IMF)

IMF Managing Director Christine Lagarde made remarks at The Ronald Reagan Building in Washington ahead of the annual meetings of The World Bank and IMF.

Lagarde said, "It is a dangerous phase of the crisis. But equally I think there is a way out and path to recovery."

After taking the helm at theIMF just over two months ago, Lagarde believes the "euro area debt crisis has worsened...Political indecision, political dysfunction are exacerbating problems," Lagarde said.

Maria Bartiromo spoke exclusively with Ms. Lagarde about the debt situation in Europe. (Click here to read the full transcript.)

IMF Chief's Plan To Boost Global Growth
Europe's debt crisis has worsened and the world economy has entered into a dangerous new zone, says Christine LaGarde, IMF managing director. CNBC's Maria Bartiromo asks LaGarde why she is focusing on short-term measures.

"Implementation, implementation, implementation. And time is running short. The Greek authorities have to deliver and become a little more bipartisan as they can to make sure the country is on track when it comes to their program," said Lagarde.

Bartiromo asked why throw good money after bad when it comes to Greece? Lagarde responded, "implementation has, in part, taken place. If you look at the massive effort that they took last year, they cut deficit by 5% in a one year time frame. That is a huge effort."

A few weeks ago, Lagarde said European banks need to raise capital. And today, she confirmed she is sticking with that statement.

And the IMF has been involved. On Sept. 12, the IMF approved a nearly $4B euro disbursement to Portugal. In early July, the IMF approved a $3.2B euro payment to Greece under a joint loan with the European Union.

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