Lagarde wants more credible IMF

6 July 2011 Last updated at 18:35 GMT Christine Lagarde: ''I don't feel specifically French or European, I feel very much a member of the whole community''

Christine Lagarde, the new head of the International Monetary Fund (IMF), says she wants the fund to be more connected, credible and comprehensive.

She was speaking at her first press conference since taking over the IMF.

Later she told the BBC a solution for eurozone debt had "to be comprehensive, cohesive and not ad-hoc, as sometimes has been the case in the past".

She also said she was confident about Portugal because there was cross-party support for its austerity measures.

And she defended her appointment as the latest in a long line of French IMF heads, saying, "I don't feel specifically French or European, I feel very much a member of the whole community."

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Hours after her candidacy was announced, the Chinese called her privately to offer their support. Days later, the Brazilian finance minister made it known to the Europeans and the US that Brazil would not be getting behind an alternative, emerging market candidate.”

End Quote Stephanie Flanders Economics editor, BBC News BBC economics editor Stephanie Flanders said that it was not just the support of European governments that won Ms Lagarde the job and that she had also been supported by China and Brazil.

Ms Lagarde said she wanted to improve diversity at the IMF.

She pledged to push ahead with reforms to give emerging markets greater sway at the international lender.

"The world is going to continue to change," she said.

"We have these tectonic plates that are moving at the moment, and that needs to be reflected in the composition of governance and employment at the fund."

'No special treatment'

"First of all, let's focus on those connections and those connecting-points between economies, within economies, and make sure that our services and our advice are actually properly including that particular aspect," she told reporters.

"For the fund to be credible, its analysis, its work, needs to be candid, needs to be credible, needs to be even-handed. There is no one category of country that deserves special treatment and another one that will receive harsh treatment."

Turning to the third "C", comprehensiveness, she said: "We cannot only analyse the economy by looking at some of the traditional standard criteria... the comprehensiveness of our approach must be enhanced."

Ms Lagarde also said she would be completing a training programme on ethics.

Her predecessor Dominique Strauss-Kahn quit to fight sexual assault charges in the US.

He denies assaulting a hotel maid in New York on 14 May and was recently freed from house arrest in the city.

The IMF is usually led by a European, while the World Bank is led by an American, but with the rapid growth of countries such as India and China, it has been suggested that people from elsewhere in the world might be considered for the jobs.

In the end, Ms Lagarde was chosen ahead of Mexico's Agustin Carstens.

She takes over at a tricky time for the IMF, with a second bail-out for Greece being discussed and the ratings agency Moody's saying there is a growing risk that Portugal will also need a second bail-out.

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US supports Lagarde to head IMF

28 June 2011 Last updated at 14:08 GMT Christine Lagarde also has the backing of Russia Christine Lagarde has taken a step closer to becoming the new head of the International Monetary Fund (IMF) after her candidacy was formally backed by the US.

The move by the US comes as the IMF's 24-strong board is meeting to agree on its new managing director.

Analysts say Ms Lagarde is now all but certain to beat her rival candidate, Mexico's Central Bank Governor Agustin Carstens.

The IMF has always had a European head.

US Treasury Secretary Timothy Geithner said: "Minister Lagarde's exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy."

Ms Lagarde also secured the support of Russia on Tuesday. She has already been backed by China and Europe.

Mr Carstens is being supported by Latin American nations, plus Canada and Australia.

In a convention dating back to the establishment of the IMF and the World Bank after World War II, a European has always held the top job at the IMF, while an American leads the World Bank.

However, the countries backing Mr Carstens have argued that it is time the IMF was led by a non-European.

The vacancy at the top of the IMF came after former managing director Dominique Strauss-Kahn was forced to resign last month after he was arrested in New York on charges of sexual assault.

Mr Strauss-Kahn denies the charges.

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IMF chooses Lagarde and Carstens

14 June 2011 Last updated at 02:56 GMT Mexico's Agustin Carstens 'would be better' for IMF, says former IMF official Charles Adams

The International Monetary Fund (IMF) has shortlisted two candidates to take over as its managing director.

French Finance Minister Christine Lagarde and Governor of the Bank of Mexico Agustin Carstens will fight it out for the top job.

The post became available after the former head of the IMF Dominique Strauss-Kahn resigned.

Mr Strauss-Kahn was arrested in the US last month on charges of an alleged sexual assault.

He has denied the charges.

Football score

The IMF said it expects to complete the selection process by 30 June.

"The Executive Board will meet with the candidates in Washington DC and, thereafter, meet to discuss the strengths of the candidates and make a selection," the fund said.

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I'm not fooling myself. It's like starting a soccer game with a 5-0 score”

End Quote Agustin Carstens Governor, Bank of Mexico Ms Lagarde is considered by many as the front runner for the post.

She is backed by the European Union and in recent days she has also won the support of Egypt, Indonesia, and the United Arab Emirates.

Mr Carstens has the support of Latin American countries.

However, he acknowledged that his rival had the edge in the race.

"I'm not fooling myself. It's like starting a soccer game with a 5-0 score," Mr Carstens said during an appearance at the Peterson Institute for International Economics on Monday.

Conflict of interest

However, Mr Carstens said that if a European candidate is appointed to the post, it may result in a conflict of interest, given the ongoing debt-crisis in some of the European countries.

"We could have a situation where borrowers dominate the institution," he said.

Mr Carstens said that the European debt-crisis had snowballed into a big problem over the years and the region needed a fresh perspective in order to solve the problem.

"What will help me is precisely to have a fresh pair of eyes," he said.

"Also someone coming from the outside can in a way speak of their mind more frankly and I think that will be an advantage," he added.

Ricardo Ochoa, head of international affairs at Mexico's finance ministry, said that Mr Carstens' experience as the head of the country's central bank, would allow him to be more sensitive to the problems of countries which needed IMF aid.

"He has been on the other side of the table," Mr Ochoa told the BBC.

"Mexico already has been in the situation where important reforms have to be implemented, and I think that puts him in a situation - to have a more understanding and more sensitive IMF," Mr Ochoa added.

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Mexican contests Lagarde for IMF

23 May 2011 Last updated at 13:26 GMT Mr Carstens (left) is the first non-European to throw his hat in the ring after Mr Strauss-Kahn's departure Mexico's finance ministry has said it will nominate the country's central bank boss, Agustin Carstens, to head the International Monetary Fund (IMF).

France's finance minister, Christine Lagarde, is favourite to take the job.

However, Mr Carstens may hope to benefit from a backlash among developing countries against Europe's historic domination of the position.

The previous head - Frenchman Dominique Strauss-Kahn - quit last week to fight sexual assault charges in New York.

The Mexicans' announcement on Sunday came a day ahead of the formal opening of nominations, with a deadline of 10 June set by the IMF for all candidates to be put forwards.

A shortlist of three will then be drawn up over the following week, from which the Fund's executive board will choose the new head by 30 June.

'Undermined'

Mr Carstens was deputy managing director at the IMF up until 2006, and before that, represented Mexico, Spain, Venezuela and Central America at the Fund.

The Mexican finance ministry said their man had "the abilities and qualifications needed to lead an institution of the relevance of the International Monetary Fund".

South Africa and Australia have said the next managing director of the International Monetary Fund should be appointed on merit and not nationality.

The body has always been headed by a European, and the pair say the current appointment system undermines the IMF's legitimacy.

"For too long, the IMF's legitimacy has been undermined by a convention to appoint its senior management on the basis of their nationality," Australian Treasurer Wayne Swan and South African Finance Minister Pravin Gordhan said in a joint statement.

"In order to maintain trust, credibility and legitimacy in the eyes of its stakeholders, there must be an open and transparent selection process which results in the most competent person being appointed as managing director, regardless of their nationality."

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There is a range of possible contenders for the top job at the International Monetary Fund. Find out about some of them

French finance minister

France

French Finance Minister Christine Lagarde, 55, looks like the leading candidate with backing from France, the UK and Germany. A flawless English speaker, she was voted best finance minister in Europe by the Financial Times in 2009. However, her nationality may count against her as several IMF chiefs have been French.

Governor Bank of Mexico

Mexico

Mr Carstens, 52, is to be nominated by the Mexican finance ministry. He has spent most of his career as an economic policymaker in his home country, becoming governor of the Bank of Mexico in January 2010 after previously serving as the bank's chief economist. He had a successful stint at the IMF from 2003 to 2006.

Ex Finance minister

South Africa

Mr Manuel, 55, is well-respected in global financial circles, having served as finance minister of South Africa from 1996 to 2009. Born in Cape Town under apartheid, he was imprisoned repeatedly by the South African government for political activities in the late 1980s. He has yet to announce his intention to run.

Finance minister/deputy prime minister

Singapore

The 54-year-old has been the country's finance minister since 2007 and on Wednesday added the new job of deputy prime minister. With degrees from the London School of Economics and Harvard. He recently became the first Asian to hold the post of chairman of the IMF's policy advisory committee.

Economic adviser to India's PM

India

Mr Ahluwalia, 67, is an influential economic adviser to Indian Prime Minister Manmohan Singh and has been a key figure in the country's economic reforms from the mid-1980s onwards. He supports open markets and has pushed the government to end fuel price controls and remove barriers to foreign business. His age may count against him.

Former German finance minister

Germany

Mr Steinbrueck, 62, is a long-shot to become IMF chief, in part because he alienated allies of Germany with his fiery rhetoric while serving as finance minister in conservative Chancellor Angela Merkel's "grand coalition" from 2005 to 2009. He also alienated the United States by openly blaming it for the global financial crisis.

Former head of Bundesbank

Germany

Mr Weber, 54, stunned Europe by announcing in February that he would be stepping down early from his post as head of the German central bank, the Bundesbank. Like Mr Steinbrueck, Mr Weber has a reputation as a loose cannon. Both Germans' chances may have been sunk by their government's support for Ms Lagarde.

Former UK Prime Minister

British

The 60-year old former UK prime minister and finance minister has long been seen as a candidate for the IMF job or another big international financial post. But his successor David Cameron - whose support he would need - has dismissed him as a "deficit denier", adding that it was time to look beyond Europe.

BACK {current} of {total} NEXT The duo are co-chairs of the G20's (Group of 20 leading rich and developing countries) IMF Reform Working Group.

Emerging economies have been calling for an end to Europe's traditional grip on the IMF leadership post.

Former South African finance minister Trevor Manuel also has been raised as a possibility, although he has yet to throw his hat in the ring.

'Distinguished'

European leaders appear to be rallying behind Ms Lagarde as a common candidate, with the Dutch government becoming the latest to endorse her on Monday.

The British chancellor, George Osborne, said Ms Lagarde would be elected on a "merit-based candidacy, as she's been an outstanding finance minister and has chaired the G20 finance ministerial meetings this year in an effective and consensual way".

More significantly, Germany has also voiced support, seemingly ruling out the chances of two mooted German contenders - Finance Minister Peer Steinbrueck, and former Bundesbank head Axel Weber.

BBC Berlin Correspondent Steve Evans says Ms Lagarde has now also been endorsed "by the two people who matter in the German government".

If given the job, Christine Lagarde would become the IMF's first female leader

Chancellor Merkel said Ms Lagarde was "distinguished" and "very experienced", and the finance minister, Wolfgang Schaeuble, told the Bild on Sunday newspaper that she was "outstandingly qualified" and "extremely respected and appreciated in the entire financial world."

Mr Schaeuble told the German newspaper: "The US and Europe pay by far the biggest share of the contributions.

"It's like in a publicly traded company: Those who hold the majority of shares will also get to name the chairman."

However, some have raised concerns that Ms Lagarde may face imminent legal issues of her own.

She faces a possible investigation of her role in sending to arbitration a 385m euro ($539m; ?335m) payment settlement from the government to businessman Bernard Tapie in 2007.

The French court of justice is to decide by 10 June - the same day as the close of nominations for the IMF - whether to launch an investigation against Ms Lagarde for abuse of power.

Voting rights

Mr Strauss-Kahn was the fourth Frenchman to have held the IMF's top job.

He is in New York on bail awaiting trial for sexual assault and attempted rape, charges he denies.

In their statement Mr Swan and Mr Gordhan said G20 leaders wanted to reforming international financial institutions, including the IMF and the World Bank.

Developed industrialised countries currently control about 57% of the voting rights in the IMF, compared with about 43% for developing nations.

With the recent emergence of Brazil, Russia, India and China, many other global figures - including the head of the Organisation for Economic Co-operation and Development - had also called for the IMF job to go to a non-European.

The appointment is usually decided unanimously by the IMF's executive board, although a majority vote by the board would be enough to choose the winner.

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