Lagarde Must Shield IMF Balance Sheet, El-Erian Writes in FT

Christine Lagarde, newly installed as managing director of the International Monetary Fund, should prepare the fund’s balance sheet for the risk of future impairment resulting from loans made in the past year, Mohamed El-Erian, the chief executive officer of Pacific Investment Management Co., wrote in the Financial Times.

This is necessary so the fund doesn’t follow the European Central Bank in obscuring a solvency problem by shifting a member-country’s debt to its own balance sheet, thus becoming part of the problem rather than part of the solution, the Pimco chief said.