IMF 'has confidence' in Christine Lagarde

The investigation relates to Christine Lagarde's time as French finance minister

The International Monetary Fund (IMF) has said it continues to have "confidence" in its managing director Christine Lagarde.

An IMF spokesman said the fund's board backed Ms Lagarde despite a French inquiry into alleged abuses of power.

The probe relates to her time as French finance minister and her involvement in the payment of compensation to businessman Bernard Tapie.

Ms Lagarde, who took over as IMF chief in 2011, denies any wrongdoing.

Her Paris apartment was searched by police investigators last week.

"The executive board has been briefed on this matter, including recently, and continues to express its confidence in the managing director's ability to effectively carry out her duties," said IMF spokesman Gerry Rice at a press conference on Thursday.

No formal charges

Ms Lagarde was involved in a dispute between French businessman Bernard Tapie and the bank Credit Lyonnais in 2007.

She referred the case to an arbitration panel, after which Mr Tapie switched his support to Nicholas Sarkozy, then leader of Ms Lagarde's UMP party, in the presidential election campaign.

Mr Tapie was later awarded 400m euros (£340m) in damages by that panel - a decision approved by Ms Lagarde.

Ms Lagarde has yet to be placed under formal investigation in the case and has denied any wrongdoing.

However, the case comes at a difficult time for the IMF.

Ms Lagarde replaced its disgraced former chief Dominique Strauss-Kahn less than two years ago.

The organisation is also deeply involved in managing the continuing eurozone crisis, including the bailout of Cyprus.