Giant aid package saved Europe from 'disaster': Lagarde

10th May 2010, Comments 0 comments

Europe avoided a disaster thanks to the trillion-dollar financial rescue package for troubled eurozone economies, French Finance Minister Christine Lagarde said in a newspaper interview.

"Every public official, including me, had in our minds the fear of a disaster if we did not quickly reach an agreement," Lagarde told the financial daily Les Echos in an interview to be published Tuesday.

"All the symptoms that had preceded the crisis of autumn 2008, just before the bankruptcy of Lehman Brothers, reappeared. It's undeniable," she said, referring to the failure of the Wall Street giant in September 2008.

The deal agreed by European Union finance ministers early Monday marks a "historic turning point," she said.

Global financial markets soared on Monday hours after the EU and the IMF gave their backing to the 750-million-euro rescue package for crisis-hit euro countries aimed at limiting the fallout from a debt crisis in Greece.

"It is not just an emergency mechanism," she said. "There is a determination to ... reinvent the European model. We have to find the rules that will keep us from such crises in the future."

Lagarde told US news channel CNN that France's share of the package -- 88 billion euros -- would be presented to the cabinet on Wednesday and then be submitted to the parliament for a vote.

She also insisted that France would keep its pledge to reduce its public deficit to the EU limit of three percent of national output by 2013.

The budget shortfalls of EU countries have come into sharp focus in the wake of the Greek crisis, which has put pressure on governments to cut spending and reduce their debt burdens.

© 2010 AFP

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