Thursday, May 26, 2011

IMF: time for change

While European countries get more deeply mired in the mess caused by the financial crisis, leading countries from outside Europe and North America are clearly signalling that they do not want yet another European to replace Dominique Strauss-Kahn at the International Monetary Fund.

Senior officials from Brazil, Russia, India, China and South Africa have just released the following statement, which we support on the grounds that the IMF has, for far too long, pushed fiscal programmes that are profoundly harmful to the social and economic sustainability of the countries where they operate. Radical change is needed at the IMF, and we don't see it coming from the leading European candidate, Mme Lagarde.

Press Release No. 11/195

We, as Executive Directors representing Brazil, Russia, India, China and South Africa in the International Monetary Fund (IMF), have the following common understanding concerning the selection of the next Managing Director of the International Monetary Fund:

1) The convention that the selection of the Managing Director is made, in practice, on the basis of nationality undermines the legitimacy of the Fund.

2) The recent financial crisis which erupted in developed countries, underscored the urgency of reforming international financial institutions so as to reflect the growing role of developing countries in the world economy.

3) Accordingly, several international agreements have called for a truly transparent, merit-based and competitive process for the selection of the Managing Director of the IMF and other senior positions in the Bretton Woods institutions. This requires abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe. 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.

4) These statements contradict public announcements made in 2007, at the time of the selection of Mr. Strauss-Kahn, when Mr. Jean-Claude Junker, president of the Euro group, declared that “the next managing director will certainly not be a European” and that “in the Euro group and among EU finance ministers, everyone is aware that Strauss-Kahn will probably be the last European to become director of the IMF in the foreseeable future”.

5) We believe that, if the Fund is to have credibility and legitimacy, its Managing Director should be selected after broad consultation with the membership. It should result in the most competent person being appointed as Managing Director, regardless of his or her nationality. We also believe that adequate representation of emerging market and developing members in the Fund’s management is critical to its legitimacy and effectiveness.

6) The next Managing Director of the Fund should not only be a strongly qualified person, with solid technical background and political acumen, but also a person that is committed to continuing the process of change and reform of the institution so as to adapt it to the new realities of the world economy.

Aleksei Mozhin, Executive Director (Russia)

Arvind Virmani, Executive Director (India)

Jianxiong He, Executive Director (China)

Moeketsi Majoro, Executive Director representing South Africa

Paulo Nogueira Batista Jr., Executive Director (Brazil)


Anonymous Vera Mshana said...

This is indeed an opportunity to transform the IMF into a global institution, and the call by BRICS should be widely supported.

5:40 am  

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