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International Monetary Fund, its relevance in doubt, chooses new

International Monetary Fund, its relevance in doubt, chooses new

The International Monetary Fund, which once lent billions to help countries through financial crises, now faces questions of its relevance in a world that seems to need it less and less.
The fund's 24 executive directors meet Friday to choose a new managing director to begin trying to chart a different course for the 185-nation organization that has been trying to give countries with fast-developing economies a greater role in IMF decisions.
In addition, IMF member countries no longer are borrowing as often as they did, so funds for operations are down, staff cuts are imminent and the agency may have to sell gold reserves to make ends meet.
Countries with fast-developing economies with access to international capital markets, such as China and Brazil, no longer need the IMF, but it still runs lending programs for poor countries, many of them in Africa.
The inheritor of these problems is almost certain to be France's Dominique Strauss-Kahn, a former Socialist finance minister. He has the support of the United States, the fund's biggest shareholder, and the 27-nation European Union.
Strauss-Kahn would replace Spain's Rodrigo de Rato, who announced in June he was retiring for personal reasons in the third year of a five-year term. De Rato will serve through the annual meetings of the IMF and its sister institution, the World Bank, Oct. 20-23.
Strauss-Kahn told the board last week, "It will be a hard task for all of us to rebuild the relevance and legitimacy of the organization, but I am prepared to do that, and I ask you to be prepared as well."
He said it was ironic that both candidates for the IMF job were Europeans. The other candidate is Josef Tosovfsky, a former Czech finance minister, who now works for the Bank for International Settlements in Switzerland.
Tosovsky was nominated by Russia in an apparent attempt to challenge a selection process that goes back to the founding of the IMF and World Bank after World War II. In that tradition, a European gets the top IMF post and and an American heads the bank.
Early this year, the European Union supported the Bush administration's choice of Robert Zoellick to take the helm at the bank.
Some member governments and aid groups have criticized the process as outmoded and have said the positions should be open to the most qualified candidates. They say a good time to do this will be 2012 when Zoellick and Strauss-Khan are scheduled to leave office.
Tosovfsky also made a presentation to the board and praised its decision to give China, Brazil, Mexico and Turkey greater says in IMF operations.
Strauss-Kahn said because the head of the IMF must have the backing of the whole organization, he undertook a 60,000 mile (96,500 kilometer) trip to visit member nations, both large and small, "listening and learning from them.
"That is why I am asking for broad support from the board," he said. "I don't want to be the candidate of the North against the South or from the wealthy against the poor."
In his statement Strauss-Kahn expressed support for many of de Rato's improvements at the IMF, including efforts to enhance representation of developing countries and more closely monitor trade imbalances and currency exchange rates.


Updated : 2021-10-21 10:31 GMT+08:00