PARIS (MNI) – Fiscal austerity measures must not undermine the
still fragile recovery of the Eurozone economy, French Finance Minister
Christine Lagarde warned on Wednesday.

Nonetheless, the consolidation of public finances is an “imperative
that must be pursued,” the minister told reporters here, underscoring
the need to pay very close attention to France’s AAA credit rating.

Asked about the recent observation of Budget Minister Francois
Baroin that the country’s prime rating faced “strains,” Lagarde
suggested that “analysis be left to the analysts.” Rating agencies must
be registered and regulated so that “everybody is responsible for his
acts,” she stressed.

The European Commission is expected today to unveil a new proposal
for regulation of ratings agencies. It is thought the proposal will
include supervision of the ratings agencies under a new body, the
European Securities and Markets Authority (ESMA).

Lagarde said, “we are doing everything to restore confidence” in
the French economy.

The need for fiscal consolidation must be “reconciled with the
maintenance of growth, which we know is fragile today and must not be
suffocated,” she said. “That’s the whole difficulty of the exercise” —
policy must be “adjusted continually,” she explained.

There is no need to revise down the government’s forecasts for GDP
growth of 1.5% this year and 2.5% next year, Lagarde argued, citing the
OECD’s lastest projections of +2.0% and +2.1%, respectively. “That means
we’re on the right path,” she said.

The upcoming G-20 financial summit will focus on the economic
conditions of each member country and the need to coordinate policies to
assure lasting growth, she said, adding that the euro would no doubt be
a topic of discussion as well.

Lagarde outlined in detail the work being done at the national and
EU level to transform the financial regulatory objectives agreed by the
G-20 into law. “Things are progressing,” she assured.

She again underscored the need to create an “economic government”
for the Eurozone so that it would be a “real economic and monetary
zone.”

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