(AFP) – Sep 26, 2007
WASHINGTON (AFP) — With a change in leadership set to be announced Friday, the International Monetary Fund looks to help restore credibility lost in recent years by the multilateral finance group.
Frenchman Dominique Strauss-Kahn, a former Socialist finance minister, is seen as virtually assured to win the post of managing director, having the backing of the 27-nation European Union and the United States.
But Russia has nominated Josef Tosovsky, a Czech former central bank chief who was briefly prime minister, and is counting on support from developing countries.
The board is to announce its decision Friday after a secret ballot.
In board interviews at IMF headquarters in Washington last week, both candidates acknowledged the Fund's dire need of reform.
"It will be a hard task for all of us to rebuild both the relevance and the legitimacy of this organization. But I am prepared to do that and I ask you to be prepared as well," Strauss-Kahn told the IMF executive board.
For his part, Tosovsky said that the IMF reform on votes and quotas undertaken a year ago, which benefited China, South Korea, Turkey and Mexico, was merely a "down payment" on the changes needed.
"That process must now be completed," said Tosovsky, who currently heads the Financial Stability Institute of the Bank for International Settlements in Basel, Switzerland.
The broad reform program spearheaded two years ago by the current IMF managing director, Rodrigo Rato, to adjust the 63-year-old organization's role to today's globalizing world, has made only incremental progress in giving a greater role to the developing economies in key decisions.
Not incidentally, the IMF also faces a financial crisis, as emerging economic powerhouses like China and Russia are flush with cash reserves and the need for IMF loans and their stringent conditions has declined sharply.
Rato's abrupt announcement in late June of his resignation next month, almost two years before his mandate ends, came on the heels of a similar change at the top at the World Bank, forced by a scandal, that had spotlighted the developing world's unhappiness with the traditional arrangement of power at the Bretton Woods institutions.
Under an unwritten agreement struck in the aftermath of World War II, Europe chooses the head of the IMF and the United States picks the president of the World Bank.
For the World Bank, the US fielded the only candidate, Robert Zoellick, who was widely approved to lead the poverty-fighting lender.
Russia threw a spanner into the bid to put French President Nicolas Sarkozy's nominee in the top IMF post, unveiling a surprise challenger in August.
The Europeans promised that Strauss-Kahn would be the last of the automatically European managing directors.
With 16.83 percent of the voting rights, the United States is the largest single shareholder in the IMF. The 27-nation European Union controls a combined 32.09 percent of the votes.
By comparison, Russia holds 2.70 percent and says Tosovsky's candidacy has wide support in the developing world.
Rato, who has led the fund since May 2004, is expected to step down after the October 20-22 annual meetings of the IMF and the World Bank in Washington.
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