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New IMF chief puts focus on emerging economies

“The International Monetary Fund (IMF) needs to increase its relevance and its legitimacy to better respond to international crises,” newly appointed IMF managing director Dominique Strauss-Kahn said.

In his first news conference since being nominated for the post over the summer, Strauss-Kahn said that overhauls he intends for the IMF will allow it to adapt to “a new balance of power in the world” and “to the new kind of financial crisis” that has hit financial markets recently. “I define myself as a candidate for reform,” said Strauss-Kahn, adding that he will "aim to give more representation to emerging countries as soon as he takes office November 1.”  

The Financial Times writes that “Strauss-Kahn described the IMF as a ‘priceless institution’ that had a vital role to play in a globalized world. However, Strauss-Kahn said the IMF must become more responsive to the concerns of poorer countries and more representative of their views if it is to survive as an institution. He said he had heard a consistent message about the IMF from world leaders on his 60,000-mile trip to garner support for his candidacy. 'They are both critical and hopeful,' he said."

In an interview with Le Monde newspaper, Strauss-Kahn said the IMF should work more closely with other multi-lateral organizations such as the World Bank, the UN Development Program, and the World Trade Organization to promote a more coherent vision of development.”

IHT reports that “With its loans declining, the IMF is under severe budget pressure and, as Strauss-Kahn put it, must develop a ‘new income model’ to bring stability to the organization." One alternative is to sell off some of the Fund’s 103 million ounces of gold reserves, valued at $70 billion.

On Monday, Strauss-Kahn focused on belt-tightening “to limit the growth of expenses,” saying the strategy was a question of “downsizing and focusing.” AP notes that “The Frenchman said he will seek to improve relations with Latin America and Asia, where many countries are wary after bowing to harsh IMF policies during the financial crises that roiled their economies in the past decade...”

Reuters writes that “The key thing was to revamp the organization, reach out to its sister organization the World Bank as well as to others and to mend fences in a meaningful way with regions of the world that felt hard done by during crises past, he said. 'My first priority is to cross (Washington’s) 19th street and go to the other side where there’s the World Bank,' he said. 'My second priority is to cross the equator to Latin America and my third priority is to cross the Pacific to Asia.'”

AFP reports that the new managing director has declined to give a timetable for his much-publicized reforms, however, saying that he wanted to consult personnel and members of the board before unveiling any concrete plans. (worldbank.org)