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Monday, December 5, 2022
Analysis by Ranjit Devraj
NEW DELHI, May 21 2011 (IPS) - With the search for a new chief of the International Monetary Fund (IMF) increasingly likely to stay within the European pale, a top Indian economist says that what matters is that the Fund changes its approach to countries in distress.
“The experience at the World trade Organisation (WTO) shows that nationality of the person at the top has only symbolic value…. Supachai Panitchpakdi from Thailand made precious little difference to the WTO,” says Jayati Ghosh, leading Indian expert on international economics.
Ghosh, who is professor of economics at the Jawaharlal Nehru University in New Delhi, told IPS that what is really important is to get leaders who are prepared to change the approach and orientation of multilateral institutions to suit changing global realities.
“Among Strauss-Kahn’s various crimes is that he pushed pro-cyclical policies on countries in distress, including those in Europe,” Ghosh said, referring to IMF loan agreements that tended to keep borrowing countries in recession.
“Strauss-Kahn could have used IMF resources to provide non-conditional lending to poor, developing countries but he failed to do that even when the IMF was carte blanche by the G20,” she told IPS.
“We are yet to hear of compensatory finance for food and fuel price hikes, which is well within the IMF’s powers,” said Ghosh. “We need to change all that, not just having a person from the developing world lead the IMF.”
Since its creation in 1945, the top job at the IMF seems to have been reserved for Europeans, who have monopolised managing director positions.
Attempts at reform in recent years have raised the vote share of the emerging economies from 39.4 percent to 44.7 percent while the G7 countries still control 41.2 percent of the vote, despite vast differences in the population sizes of the two groups.
India, which is among emerging countries that have been calling for reforms, seemed keen to push the chief of its main economic planning body, Montek Singh Ahluwalia as a candidate for the top job at the IMF.
Soon after Strauss-Kahn announced his resignation, following his arrest by New York police on charges of attempting to rape a hotel maid, India’s chief economic advisor Kaushik Basu stirred speculation by stating that he thought Ahluwalia a good candidate “not only from India’s point of view, but from the world’s point of view also.”
Ahluwalia said he was happy with his current assignment and not in the running, but speculations died down only after it was known that at 67 he had crossed the age limit for the job by two years.
The age bar also ruled out Stanley Fischer, currently governor of Israel’s central bank. Other non- European names doing the round for the job were those of Turkish economist Kemal Dervis and South Africa’s finance minister Trevor Manuel.
Armino Fraga, who has served as president of Brazil’s central bank, and is credited with controlling the fallout of the country’s 1999 currency devaluation by hiking up interest rates and making borrowing more difficult, is seen as another emerging country possible.
Brazil, as also South Africa and China, have called for a new approach to selecting the IMF chief.
If Europe is able to retain the IMF leadership, French Finance Minister Christine Lagarde is considered the favourite, but she faces charges of bypassing the French justice system to help former minister and businessman Bernard Tapie in an arbitration case.
A decision should ideally be made before the leaders of the G8 countries – the United States, Russia, Japan, Canada, Germany, France, Britain and Italy, plus the European Union – meet in the French seaside resort of Deauville from May 26 to 27.
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