India kept its cards close to its chest and voiced its support to French Finance Minister Christine Lagarde for the post of IMF head only yesterday, after it became quite clear that she is poised to be selected for the coveted post.
Officials said India was evaluating various options and wanted to know the US position before it could make its stand public. US also supported Lagarde’s candidature only yesterday, the day when IMF Executive Board selected her as IMF head.
“India today (June 28) indicated its support for the candidature of Christine Lagarde for the post of Managing Director, International Monetary Fund,” a statement by Executive Director Arvind Virmani, who represents India along with Bangladesh, Bhutan and Sri Lanka in IMF, said in a statement here. Lagarde, whose predecessor is also French, is the first woman to head IMF. The post of IMF head fell vacant after Dominique Strauss-Kahn stepped down on charges of sexual assault.
One option before India was to support Mexican central bank governor Agustin Carstens, a candidate from emerging markets. However, officials said it did not make sense for India to waste its vote on a losing candidate when Lagarde was poised to be IMF MD.
“The US also made its decision public on the last day and India did not want to jump the gun without knowing what other economic powers would do. The US, with 16 per cent voting share, was holding the key to selecting the IMF chief,” a key official said. This, many would say makes mockery of a joint resolution from Brazil, Russia, India, China and South Africa (BRICS) to demand scrapping of unwritten convention that IMF MD has to be a European.
However, officials said through the joint statement India wanted a candidate from the BRICS region to head the Fund. Carstens, though coming from a developing nation, was not from the BRICS, they added. Virmani told Business Standard that the BRICS statement was about reform of the selection process for an IMF ED. “We will continue to work for IMF Governance and Quota reforms as and when the opportunity arises.”
As to whether Carstens’ loss indicates moral loss to developing nations, the Executive Director in IMF said, “I saw no changes in the selection process/system that would lead me to expect an outcome different from what had prevailed in the last seven decades.” In fact, most members of BRICS supported Lagarde, officials said. Also, Lagarde has better relations with India compared to Carstens. She had also promised to give developing nations greater voice at the IMF.
On her selection, Finance Minister Pranab Mukherjee said a robust and sustained global economic recovery is a priority, as is the task of carrying forward the process of reform to ensure that emerging economies have a greater voice in the decision making processes of the IMF.
Lagarde said, “I will make it my overriding goal that our institution continues to serve its entire membership with the same focus and the same spirit.” Her opponent in the fray Carstens hoped that the IMF will make meaningful progress in strengthening the governance of the institution under Lagarde’s direction.
