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APAC

Europe must not delay cash to crisis-hit economies, Lagarde tells Le Monde

European Central Bank (ECB) President Christine Lagarde gestures as she addresses a news conference on the outcome of the meeting of the Governing Council, in Frankfurt, Germany, March 12, 2020. REUTERS/Kai Pfaffenbach/Files

FRANKFURT (Reuters) - Europe must distribute its 750 billion euro recovery fund for the pandemic-hit economy promptly and should debate creating a permanent fiscal tool for the bloc, European Central Bank President Christine Lagarde told a French newspaper.

European leaders have been at odds over the details of a multi-year grant and loan scheme called Next Generation EU, raising the risk that cash would not start reaching the hardest hit nations on time.

“The Commission’s aim is to be able to distribute these funds at the beginning of 2021, and this timeline must be kept,” Lagarde was quoted in Le Monde as saying. “We also need rapid progress on the political side, in particular the adoption of the measures by national parliaments.”

Lagarde added that funds must be targeted, otherwise they get lost in the “administrative labyrinth,” failing to support the real economy’s transformation in the post-pandemic world.

She also said that European leaders should consider making the recovery fund permanent, a taboo in some more conservative countries, and should also discuss setting up a permanent budget for the euro zone.

“We think it’s essential that the fiscal safety nets that governments put in place during this crisis are not withdrawn too soon,” Lagarde said.

On monetary policy Lagarde largely repeated the ECB’s standard guidance, saying that the bank’s toolbox is far from exhausted and policymakers will add to stimulus, if necessary.

Reporting by Balazs Koranyi; Editing by Muralikumar Anantharaman and Richard Pullin

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