Sunday 18 March 2018

Lagarde faces hard bargaining before IMF job is hers

Lesley Wroughton in Washington

Christine Lagarde looks set for the plush corner suite at the IMF headquarters -- but unlike most of the Europeans who cruised into the top job, she has hard bargaining to do with emerging economies first.

Developing nations that want their growing economic prowess reflected in their clout at the International Monetary Fund have won only modest increases so far.

Before his downfall in May, Dominique Strauss-Kahn oversaw a shift in voting power that gave emerging markets greater say at the global lender but not as much as they had wanted.

He named a Chinese special adviser, a step short of giving Beijing a coveted deputy managing director post.

Ms Lagarde may have to go further.

"Christine Lagarde must not be handed a blank check," said one senior official from a developing country, who acknowledged she was likely to succeed Mr Strauss-Kahn as managing director.


"If she wants the support of developing countries, she must commit to continue reforming the institution."

Ms Lagarde, the French finance minister, has the political muscle to keep up pressure on European leaders to deal with the continent's debt crisis -- a key asset for the top IMF job.

Mr Strauss-Kahn, a former French finance minister, quit last month to fight sexual assault charges and his successor is due to be chosen by June 30.

While Ms Lagarde is seen as the favourite, due to the expected support of Washington as well as Europe, the race has already been one of the most hotly contested in IMF history.

In the past, candidates from emerging economies have kept low profiles and did not criss-cross the world to seek support actively, as Mexican central bank chief Agustin Carstens has done in recent weeks.

The surprise candidacy of Stanley Fischer, the Zambian-born head of Israel's central bank, combined with that of Mr Carstens, adds to pressure on Ms Lagarde to pay heed to developing nations.

The support of the US and the EU would put her within a whisker of the majority she needs, but Washington is expected to want Ms Lagarde to show broad support from developing economies, too. So far, most emerging economies remain on the fence about their intentions.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business