–Adds comments on French domestic economy

PARIS (MNI) – The E30 billion contingency aid package for Greece
was agreed unanimously by all 16 Eurozone finance ministers on Sunday,
including Germany’s, and there is “no room” for disagreement or
questions, France’s Finance Minister Christine Lagarde said Tuesday.

Lagarde told anglophone journalists at a breakfast press briefing
that as far as she was concerned the deal agreed was clear,
straightforward, and definitive.

She said that Germany did not seek to impose higher interest rates
on Greece than the ones stipulated in the package. She noted that the
communique issued by Eurozone finance ministers about the deal did not
stipulate that Greece could only request assistance as a “last resort.”

Lagarde said the Eurozone finance ministers decided it was a good
idea to emulate IMF practices in setting the interest rate. The
contingency package would only be activated in the event that Greece
formally requested it, the ECB and European Commission concurred, and
all sixteen Eurozone states unanimously approved.

She said that bilateral loans from each individual EMU state would
follow national procedures. She noted that in France such a loan would
require parliamentary approval, but that such approval could be obtained
within a week.

Lagarde said that the Greece deal shows that the Eurozone states
can act in unity providing “a new mechanism” which could be used in the
future. “We are effectively forging something new,” she said, “let’s
hope we never need it again. But should we, certainly we have shown we
can close ranks, come together, and come up with an agreement to address
the situation.”

On the domestic front, Lagarde conceded that France’s plan to cut
its deficit to the EU limit of 3% of GDP by 2013 is based on a “very
ambitious forecast” for growth between 2011 and 2013. The French budget
plan assumes GDP will expand at an average clip of 2.5% in those years.

Asked to respond to European Commission criticism that the plan is
too optimistic, Lagarde took a backward-looking view, pointing out that
the French economy contracted by only 2.2% last year, compared to
Germany’s -4.9% and the UK’s -5.0%.

“We are not crisis-resistant, but we are certainly more
crisis-resilient than others,” Lagarde said. “I am hopeful that with the
reforms we have implemented over the last 2.5 years and growth kicking
in internationally and in the euro area, France can pick up the wind a
little earlier.”

She added, “we’ll have plenty of time later in June to demonstrate
to our partners and to the Commission how we will arrive at our deficit
cuts.”

She said that the pursuit of additional reforms, including an
aggressive reform of the pension system, “will actually change the
landscape.”

Lagarde predicted that the French economy will “continue to destroy
jobs in 2010,” although some sectors are already picking up this year.
“In 2011 we should see a clear recovery by way of net job creation,” she
said.

–Paris newsroom: +33-142715540; bwolfson@marketnews.com

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