Politics

IMF's Christine Lagarde applauds Canada's stimulus spending, gender equality

International Monetary Fund boss Christine Lagarde said the Trudeau government's infrastructure spending is an example other countries can use to spur growth — if they have their fiscal houses in order.

IMF boss also says globalization 'is providing huge benefits'

Prime Minister Justin Trudeau meets managing director of the International Monetary Fund Christine Lagarde on Parliament Hill Tuesday. (Adrian Wyld/Canadian Press)

The Canadian government is right to use infrastructure spending to stimulate economic growth and to put a spotlight on gender equality issues, according to Christine Lagarde, managing director of the International Monetary Fund.

In an interview with Power & Politics host Rosemary Barton, Lagarde expanded on comments she made Tuesday following her one-on-one meeting with Prime Minister Justin Trudeau. 

Lagarde said Canada is in a good financial position to use government spending to stimulate the economy. 

"There are countries which do not have fiscal space, they should not go there," Lagarde said. "Canada does have the fiscal space."

Christine Lagarde, the head of the IMF, praises the Trudeau government. 0:37

Lagarde said the IMF supports deficit spending if it is focused on projects with long-term value that will create jobs. The 2016 federal budget included $120 billion over 10 years for infrastructure construction and maintenance projects.

"If you use [fiscal space] to invest in infrastructure, that will, in the medium to long term, improve productivity of the country, and in the short term will actually boost growth because it will put people to work," Lagarde said. 

"When you open a big construction site, you have people working, you have income being paid, you have income being consumed, so you enter into that virtuous circle which can be net positive."

"We certainly encourage that policy mix of Canada and we encourage it to go viral."

Gender equality

Lagarde applauded Trudeau for appointing a cabinet with gender parity and got the prime minister to reveal Canada's next representative at the IMF will be a woman, months ahead of the official appointment.

Gender equality contributes to economic growth and social stability, so men and women are both responsible for closing the gender gap, Lagarde said.

She said she hopes Trudeau's publicly calling himself a feminist will contribute to substantial change.

"We always need a wake-up call on those issues. There's a lot of lip service paid to the women's cause and to the fight against discrimination," she said. "If he's a feminist and everybody pays attention, great."

Globalization defenders urged to 'speak up'

The IMF recommends re-training programs for laid-off workers and a strong social safety net to help absorb the shocks and losses of globalization, Lagarde said.

"It's not globalization at any rate, without barriers, unruly," she said. "It's globalization that protects those who need to be up-trained, up-skilled and better equipped."

But, she added, the benefits of globalization are being under-appreciated at a time when protectionist rhetoric has taken centre stage in the United States presidential election — with candidates railing against trade deals such as NAFTA and immigration.

"I would certainly encourage those who believe in globalization — meaning trade, integration, movement of capital, movement of labour — to actually speak up, and make that case that it has actually been worth the effort," she said. "That [globalization] is providing huge benefits to the country and that it is beneficial to all partners in the trade."

Watch the full interview in the player below:

'If he's a feminist and everybody pays attention, great,' says Christine Lagarde. 11:16