IMF: Who will be its next MD?

23rd May 2011

A north-south rift has opened up over the next head of the International Monetary Fund (IMF) following Dominique Strauss-Kahn's resignation.

It has been convention to appoint a European as head of the organisation but this is being challenged by Australia and South Africa who are calling for IMF management to be chosen on merit rather than by nationality. The two countries' view is thought to be backed by China, India and Brazil.

French economy minister Christine Lagarde has emerged as a frontrunner for the job, with the Telegraph reporting she is a ‘shoo-in' as the next managing director of the International Monetary Fund, "after leading European states swung their support behind France's 'golden girl'". She is backed by Britain and other major European states, but former South African finance minister Trevor Manuel, has also emerged as a strong contender.

Australia and South Africa released a joint statement challenging European control of the IMF. It said: "For too long, the IMF's legitimacy has been undermined by a convention to appoint its senior management on the basis of their nationality.

"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."

Strauss-Kahn is currently on bail after being charged with sexually assaulting a hotel maid in New York. He resigned from the IMF last week.

Other contenders for the IMF position include Mexico's central bank chief, Agustín Carstens. A three-person shortlist will be drawn up by the IMF's executive committee on 10 June and a vote will be held on 30 June.

The Economist is having a debate about who should be next to lead the IMF, with guest contributors from different financial backgrounds, and the general consensus seems to be against a western leader.

With the community believing that the chief should be decided by merit, rather than nationality:

Ronnie Hossain says: "Perhaps I am talking nonsense here, but how about actually letting individual merits trump for once. Personally, I find the current overemphasis on nationality a tad worrisome…"

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