Christine Lagarde Announces IMF Bid, Reportedly with China, Brazil's Support

    French Finance Minister Christine Lagarde. Photo by: Sebastian Derungs / World Economic Forum / CC BY-SA

    The race for the top position at the International Monetary Fund continues to heat up, with French Finance Minister Christine Lagarde formally announcing her bid and emerging countries allegedly not as united as initially reported in their campaign to end Europe’s dominance of the international lender.

    Lagarde announced on Wednesday (May 25) that she was running for the position vacated by another French, Dominique Strauss-Kahn, who resigned as managing director after being indicted for alleged sexual assault in the United States. Her candidacy is backed by the European Union, Germany, the United Kingdom and other major European economies.

    The French minister is widely recognized as the front-runner in the race, with some experts and former IMF officials noting that the managing director position is “almost a done deal for Lagarde.”

    Challenge from emerging countries

    Before Lagarde made her bid formal, top emerging countries released a rare joint statement calling for changes in the conventional selection process of an IMF chief. The IMF directors from Brazil, Russia, India, China and South Africa dismissed as “obsolete” the practice of naming a European to lead the fund.

    >> BRICS: European Dominance of IMF Top Post ‘Obsolete’

    But there are reports indicating that the so-called BRICS countries are not as united against another European IMF chief as suggested by the joint statement.

    French Budget Minister Francois Baroin said China is “favorable” of Lagarde’s candidacy, according to Bloomberg. The Brazilian government also plans to privately support Lagarde’s bid, the news agency says, citing a source familiar with the negotiations.

    Russia, meantime, said it is positive about Lagarde’s ability to lead IMF but added that it is not ruling out the possibility of naming its own candidate.

    These emerging countries are also having trouble rallying behind a single candidate. Augustin Carstens, Mexico’s central bank governor and candidate for the post, has yet to gain the support of the BRICS countries.

    “While Europe has closed ranks around its candidate, the emerging markets are united only around the concept of making a bid for the post of IMF managing director rather than a particular candidate. This will weaken their position, so they need to act soon and decisively to agree upon a viable candidate they can all support,” The Wall Street Journal quotes Eswar Prasad, an economist at Cornell University.

    South African Finance Minister Pravin Gordhand, however, maintained that emerging nations can unite behind a single candidate.

    “The key is that they should be given some time to canvass their respective views and try to find some convergence around one or more candidates,” he said, according to Bloomberg.

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    • Ivy Mungcal

      As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.