Euro is a 'credible, solid' currency: Lagarde

LONDON, June 26, 2010 (AFP) – French Finance Minister Christine Lagarde called the euro "a credible, solid" currency and expressed confidence that troubled eurozone member Greece will be able to cut its public debt.

(AFP file) French Finance Minister Christine Lagarde
(AFP file) French Finance Minister Christine Lagarde

Asked in an interview with the BBC whether the European currency faced a threat to its continued existence, Lagarde said: "I know that that's some sort of an existential dream of some economists.

"They're very pleased to drive those sorts of dark scenarios and my position is I don't want to drive those dark scenarios.

"What I'm focused on is what is going to work so that the eurozone stays together, supports the euro together, because the euro is a credible, solid and good currency for all of us and it's our public good," she added.

She dismissed as "just a lot of rubbish" speculation about Greece's ability to repay its debts within the next 18 months.

"The plan that we've put together for Greece is a five-year plan, with a three-year grace period when they pay back nothing and then there are 24 monthly instalments over the next two years," Lagarde said

"So let's not mess around with 18 months," she said, adding that Greece was "currently delivering against its commitments".

Greece has adopted austerity cuts to secure a 110-billion-euro (135-billion-dollar) bailout loan from the European Union and the International Monetary Fund and save itself from default.

It is struggling to reduce a debt of nearly 300 billion euros while mired in a deepening recession.

Lagarde also said there was "no difference, no crack" between France and Germany over how to deal with the financial crisis.

"We're both driven by the two-fold objective to maintain growth and of cutting deficit and debts, and this is our joint commitment," she said.

Asked whether Germany was doing enough in the crisis, she said, "Germany is doing everything it can at the moment.

"We can all do more and some can do more in cutting deficits and debts, some can do a little bit more in spending and consuming," she added.

Europe has come under increasing pressure from the United States to focus on measures to stimulate and protect economic growth, rather than to rein in spending programmes put in place to combat the worst recession in decades.

But German Chancellor Angela Merkel, head of Europe's largest economy, has led moves to slash spending after the eurozone debt crisis forced Berlin to stump up the lion's share of cash for an unprecedented rescue mechanism.

Critics have said that the more than 80 billion euros (98 billion dollars) in savings announced by Merkel over the next four years, which mirror similar efforts in other European countries such as Britain, will hit growth.

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