China urges Lagarde to deepen IMF reforms

 

France’s Finance and Economy Minister Christine Lagarde (C) speaks to the media as she leaves the Elysee Palace following the weekly cabinet meeting in Paris June 29, 2011. Lagarde was named on Tuesday as the new managing director of the International Monetary Fund (IMF). [Photo/Xinhua News Agencies] 

* Emerging economies look for key appointments

* US already considering official for No 2 position

* Lagarde wins support from those who backed her challenger

BEIJING – A spokesman of the People’s Bank of China (PBOC), or the central bank, said Wednesday that China welcomes the endorsement of French Finance Minister Christine Lagarde as the new chief of the International Monetary Fund (IMF).

China hopes that under Lagarde’s leadership, the IMF will continue its reform and play an active role in stabilizing the global economy, while increasing the representativeness of emerging markets and developing countries in the governance of the IMF, the spokesman said in a statement on the PBOC website.

The PBOC spokesman said the election of the IMF leadership was open, transparent and competitive.

Mexican central bank governor Agustin Carstens also showed impressive leadership and professional competence during the campaign, said the spokesman.

Asia’s fast-rising economies set their sights on securing key IMF appointments under newly named chief Christine Lagarde on Wednesday, hopeful she would be the one to make good on oft-heard pledges to swing more power to emerging markets.

Lagarde said all the right things on her recent campaign-trail tour of Asia. She acknowledged that countries such as China and India deserve increased IMF voting power commensurate with their growing economic clout, and a fair shot at the emergency lending institution’s top decision-making posts.

“Lagarde is a friend of India,” a senior Indian government source said. “We can’t get the IMF managing director’s chair for now but at least India can get some high-level appointments in the IMF during her tenure and we will work towards that.”

Lagarde begins her five-year term as managing director of the International Monetary Fund on July 5, and will find herself immediately immersed in efforts to head off a Greek debt default that could spark an international crisis.

High on her to-do list within the Fund will be appointing a top leadership which fairly reflects global economic influence, and shepherding through an already agreed process to reallocate IMF voting rights to give emerging markets greater say. 

Lagarde received support from many major Asian economies even though she perpetuates a pattern they despise of Europeans holding the top IMF job. No Asian candidate stepped forward to challenge Lagarde and Mexico’s Agustin Carstens.

“Lagarde has been more successful in consensus building to bridge relationships between advanced countries and emerging markets,” Indonesia’s central bank deputy governor Hartadi A. Sarwono told Reuters.

She will need those skills for the difficult personnel decisions. The United States is already considering putting forward a Treasury Department official for the No. 2 role, which has traditionally been filled by an American.

Breaking with that tradition might help convince Asian countries that Lagarde is serious about reforming the IMF, although there was no indication that she had made any promises to award the second-in-command role to someone from Asia.

Singapore Finance Minister Tharman Shanmugaratnam, who also chairs the IMF’s steering committee, said he had spoken to Lagarde about the importance of IMF reforms that “reflect the evolving balance in the global economy and financial system.”

Even countries that had backed Lagarde’s challenger, Carstens, pledged their support. Australian Treasurer Wayne Swan said he had worked with Lagarde through the Group of 20 club of rich and emerging countries, and welcomed her appointment.

“We’re very happy to see the process concluded so this important institution can continue its work,” Swan said through a spokesman.

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