"We think that public or private investment (in Germany) to finance infrastructure would be welcome," Lagarde told French daily Les Echos in an interview on Monday, stressing this did not mean making the German economy less competitive.
The suggestion follows Thursday’s proposal by the European Central Bank for a series of measures to stimulate growth, with President Mario Draghi urging the governments to support the process with an increase in spending.
In a second interview to Radio Classique, Lagarde said that Germany “can go a bit further, that it can do a bit more, in Germany's interest."
German Chancellor Angela Merkel has said that investment would take priority if Germany had money available. Germany's 2015 budget projects no net new borrowing for the first time since 1969.
“I think structural reform is necessary in terms of labor market regulations, excessive regulations in some areas, of areas of economic activity that are too protected and which need to be opened up to competition,” the IMF head said. “This goes for everyone... it's true for France, it's true for Germany, and it’s true for Italy.”
In turn, she recommended France, where she was finance minister, should stick to its deficit-reduction plan.