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Friday July 1, 2011

Asian Economies Seek IMF Posts

Asia's fast-rising economies set their sights on securing key IMF appointments under newly named chief Christine Lagarde today, hopeful she would be the one to make good on pledges to swing more power to emerging markets.

Ms Lagarde said all the right things on her recent campaign-trail tour of Asia. She acknowledged that countries such as China and India deserve increased IMF voting power commensurate with their growing economic clout, and a fair shot at the emergency lending institution's top decision-making posts.

"Lagarde is a friend of India," a senior Indian government source said. "We can't get the IMF managing director's chair for now but at least India can get some high-level appointments in the IMF during her tenure and we will work towards that."

Ms Lagarde begins her five-year term as managing director on July 5th, and will find herself immediately immersed in efforts to head off a Greek debt default that could spark an international crisis.

High on her to-do list within the organisation will be appointing a top leadership which fairly reflects global economic influence, and shepherding through an already agreed process to reallocate IMF voting rights to give emerging markets greater say.

Ms Lagarde received support from many major Asian economies even though she perpetuates a pattern they despise of Europeans holding the top IMF job. No Asian candidate stepped forward to challenge Ms Lagarde and Mexico's Agustin Carstens.

"Lagarde has been more successful in consensus building to bridge relationships between advanced countries and emerging markets," Indonesia's central bank deputy governor Hartadi A Sarwono said.

She will need those skills for the difficult personnel decisions. The United States is already considering putting forward a Treasury Department official for the number two role, which has traditionally been filled by an American.

Breaking with that tradition might help convince Asian countries that Lagarde is serious about reforming the IMF, although there was no indication that she had made any promises to award the second-in-command role to someone from Asia.

Singapore finance minister Tharman Shanmugaratnam, who also chairs the IMF's steering committee, said he had spoken to Ms Lagarde about the importance of IMF reforms that "reflect the evolving balance in the global economy and financial system."

Even countries that had backed Ms Lagarde's challenger, Carstens, pledged their support. Australian Treasurer Wayne Swan said he had worked with Ms Lagarde through the Group of 20 club of rich and emerging countries, and welcomed her appointment.

"We're very happy to see the process concluded so this important institution can continue its work," Mr Swan said through a spokesman.

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