A New Face for the IMF/Una cara nueva para el FMI

Kennon Pearre

Office of the Simon Chair

The announcement by the International Monetary Fund (IMF) that Christine Lagarde and Agustin Carstens have been shortlisted for the top job at the organization has sent both candidates on world tours to garner support for their bid. As both are well qualified, questions of nationality and credentials are playing major roles in the global discussion surrounding Lagarde and Carstens. While Christine Lagarde has received headlines around the world, Carstens remains underrepresented in comparison. The Mexican economist and current head of Banco de México (Mexico’s Central Bank) even admits that Lagarde has the edge in the race, equating his situation with starting a soccer game down 5-0.

Carstens, not giving into defeatism, has flown to China to drum up support for his bid, hoping that like Latin America (excluding Brazil, Argentina, and Chile, which have not openly backed him), Asian countries will support his aspirations. Starting to build support in Asia is critical for Carstens as many countries in the region are still resentful of how the IMF handled the 1997-98 financial crisis in the region.

Carstens argues that as a Mexican economist he is well-versed in developing economies, adding that the majority of economic growth in recent years can be attributed to these nations. His economic background and time spent working at the IMF bolsters Carstens’ credentials, whereas Largarde, although Finance Minister, is a lawyer by trade.  Another argument in support of Carstens’ bid for IMF chief is the conflict of interest a European candidate could have with the ongoing debt crisis that affects various European economies. He stressed that “we could have a situation where borrowers dominate the institution.” As a non-European, he claims that he would bring new eyes to the situation which has only grown into a bigger problem in recent years.

Christine Lagarde’s popularity as France’s Finance Minister has propelled her to the front of the pack even before the IMF announced the front-runners. Lagarde now has not only the support of the European Union, but also voiced approval from developing nations such as Egypt, Indonesia, and the United Arab Emirates. There is no doubt that a Carstens victory remains unlikely, but with a rapidly changing global economic order, the IMF will soon find the need to address this reality by appointing an individual from the developing world.

Photo courtesy of Wikimedia Commons