Addis Ababa, May 25: Skirting the issue of the choice of a new Managing Director of IMF, Prime Minister Manmohan Singh today said the developing countries should be together in the attempt to reform the global financial institutions.
“I am not very well informed on what is going on with regard to Managing Director of IMF but I do recognise that the struggle for transformation of global institutions including Bretton Woods is not a one shot operation. “It is a long process in which all developing countries have to stand united”, Prime Minister Manmohan Singh told reporters here.
The post of the IMF managing director fell vacant following the exit of Dominique Strauss-Kahn, who is being tried for charges of sexual assault.
Although some European nations have declared their support for French Finance Minister Christine Lagarde, the BRICS nations—Brazil, Russia, India, China and South Africa— have issued a joint statement in Washington questioning the methodology of selection of IMF chief on the basis of nationality.
“The convention that the selection of the Managing Director is made, in practice, on the basis of nationality undermines the legitimacy of the fund,” Executive Directors representing the BRICS had said in a statement.
Besides others, the name of Deputy Chairman of India's Planning Commission Montek Singh Ahluwalia has figured in list of probable candidates for the top IMF job. The process of selection of chief and other senior functionaries of the IMF should be viewed as a part of the reform of the Bretton Woods Institutions. Noting that reforms of the Bretton Woods institutions have remained on the agenda of the developing nations for quite some time, Singh said, “we have to recognise that international relations are power relations and those in power do not wish to yield ground easily”.
The BRICS grouping too had called for “abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe”.
Pressing for reforms, the BRICS statement said that the multilateral institution should reflect the growing role of developing countries in the world economy.
In Paris, French Finance Minister Christine Lagarde said today she is running as a candidate to head the International Monetary Fund, after she received wide European backing for the post.
“I have decided to present my candidacy” for the job, she told reporters, adding that she had made the decision “after mature reflection.”
If appointed, she would be the first woman to head the global emergency lender which is currently deeply involved in the eurozone debt crisis.
An EU source said on Friday that Lagarde, 55, was practically certain to become Europe's candidate, although she has been dogged by a French judicial probe into allegations of abuse of power.
“I have a perfectly clear conscience” about that affair, she told reporters today after her announcement. Lagarde gained fresh endorsements on Wednesday, with the head of the European Commission Jose Manual Barroso saying he fully supported her decision.
EU Economic Affairs Commissioner Olli Rehn said that “Christine Lagarde is without doubt a figure who carries weight on the international stage,” in remarks to French business daily Les Echos.
“Her reputation has grown further in recent months through her skill in managing the debt crisis in Europe and her good management of the French presidency of the G20” grouping of big economies, he added.
A French prosecutor called this month for a probe targeting Lagarde in connection with her handling of a high-profile scandal involving tycoon Bernard Tapie, amid allegations that she exceeded her authority in the case. Lagarde has cut an impressive figure as the first female finance minister of a G7 power, earning a reputation for grace under fire during the global economic crisis. The IMF's former chief economist Kenneth Rogoff told the New York Times Lagarde was so popular at finance meetings that she was “treated practically like a rock star.”
Lagarde has received the backing of Germany, Britain and other European countries to take over as managing director of the International Monetary Fund, a global lender with a key role in calming the effects of the financial crisis on public finances in Europe.
The IMF's former head, Frenchman Dominique Strauss-Kahn, resigned last week after his arrest in New York on sexual assault charges.
The post is traditionally held by a European, but emerging economies complain that the post should be opened up to their candidates.
IMF directors from Brazil, Russia, India, China and South Africa—the so-called BRICS economies—said Europe's longstanding exclusive deal to lead the IMF “undermines the legitimacy of the Fund.”
“We are concerned with public statements made recently by high-level European officials to the effect that the position of managing director should continue to be occupied by a European,” they said in a declaration. The 2008-2009 financial crisis in the United States and Europe showed the need to reform institutions like the IMF “to reflect the growing role of developing countries in the world economy,” they added. AFP