Lagarde admits IMF’s ‘harsh’ conversion to inequality crisis

IMF head Christine Lagarde conceded Wednesday the Washington lender had been late waking up to the widening gap between rich and poor around the world, but is now researching answers to the problem.

“There has been a strong backlash (against) economists in particular saying that this was not really of their business to worry about these things, including in my own institution,” Lagarde told an audience of high-flying executives at the World Economic Forum in Davos, Switzerland.

The International Monetary Fund is “now being very harshly converted to the importance of inequality and studying it and providing policies in response to that”, she said.

An Oxfam report coinciding with Davos this week said eight billionaire men own the same wealth as the poorest half of the world’s population.

That level of inequality “threatens to pull our societies apart”, Oxfam said.

For its part, the IMF often demands unpopular reforms from governments in return for its financial aid stoking voter discontent where it is active, including in Greece.

Lagarde has been trying to make the IMF more responsive to public disquiet and has speaking out about inequality linked to globalisation, as voters in the West increasingly turn to populist parties.

“When you have a real crisis or when you have very strong signals as we have received from the voters from people who say no, it’s really time to say … what more can we do,” she said.

“If policymakers do not get the signal now, I don’t know when they will.”