Asia looks to “friend” Lagarde to honor IMF pledges

SINGAPORE: Asia’s fast-rising economies set their sights on securing key IMF posts under new chief Christine Lagarde, hopeful she would be the one to make good on oft-heard pledges to give more power to emerging markets.Lagarde said all the right things during her recent campaign-trail tour of Asia. She acknowledged that countries like China and India deserve increased IMF voting power to reflect 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 on Wednesday.”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 toward 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.China’s central bank said in a brief statement that it hoped Lagarde would push for reform, and wanted to see the IMF play a positive role in promoting global financial stability “and to increase the representation of emerging economies in the IMF governance structure.”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.Carstens, Mexico’s central bank governor, hit out at international bodies on Wednesday, saying they failed to live up to the standards they set for others.”The reality is that these institutions have always asked for transparency from us, they have asked us to adopt democratic principles that they do not enforce themselves,” Carstens told Mexican radio.Lagarde will need to be diplomatic for the tough 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. – Yahoonews