Lagarde: Sustainable Finances Key for Economic Stability

19/10/2026 02:55 AST

European Central Bank (ECB) president Christine Lagarde stressed on Saturday the importance of sound public finances when she addressed ministers in charge of budgets from around the world in Thailand.

In her statement to the International Monetary and Financial Committee that comprises global finance ministers and central bankers, she said fiscal sustainability remains a "crucial anchor" for broader economic stability, according to Bloomberg.

"It is important to maintain sound fiscal policies, including by adhering to fiscal rules, and, where debt is high, to consolidate, re-prioritize spending and enhance the efficiency and effectiveness of public finances to rebuild buffers," Lagarde noted.

"Governments should strive to ensure that any fiscal response to the energy shock is temporary, targeted and tailored," she added.

Her remarks come after a week of intense debate in the Thai capital, where the International Monetary Fund (IMF) held its annual meetings.

Discussions focused on the risks hanging over the global economy as it faces rising debt levels, an artificial intelligence revolution and increasingly complicated geopolitics.

"A return to an international economic order grounded in openness, predictability and the rule of law would help trade and investment flourish," Lagarde said.

Turning to the eurozone, Lagarde reiterated the ECB's assessment that economic growth faces downside risks, while inflation risks remain tilted upward.

"The energy shock is too large to 'look through' but a measured response remains appropriate to keep inflation in check," she said.

ECB raised interest rates twice - in June and September - and is widely expected to deliver another hike at the end of the year.

Lagarde also said that more than 30 central banks have expressed interest in the Eurosystem's enhanced repo facility, which aims to support the smooth transmission of monetary policy and reinforces the international role of the euro.

Asharq Al Awsat