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Lagarde promises to push reforms at IMF
Christine Lagarde, at her first news conference as the new head of the International Monetary Fund, vowed Wednesday to push ahead with reforms that give a greater say to major emerging countries such as China in managing the world economy.
Ms. Lagarde, a former French finance minister and Olympic swimmer who replaced Dominique Strauss-Kahn after he stepped down last month amid charges of sexual assault, also pledged to make the powerful international bureaucracy more open and diverse and maintain the highest ethical standards for its management and staff.
“The world is going to continue to change. We have these tectonic plates that are moving at the moment. And that needs to be reflected in the composition of the governance and employment at the fund,” she said.
“We must complete the 2010 reforms,” she said, referring to pledges by the world’s top leaders to give greater voting representation to China, India and other emerging countries in the IMF’s governing board.
Those greater voting shares would come at the expense of small European countries, such as Belgium, which would have to cede power, so analysts say Ms. Lagarde will have to call upon her considerable diplomatic skills to accomplish the change.
Currently, European nations collectively control nearly a third of the votes on the board, the U.S. controls 17 percent, and China, the world’s second-largest economy, controls only 4 percent. China’s share is due to increase to 6 percent, requiring smaller European nations to give up two of the 24 seats on the board.
“Governance and quotas must be readjusted to reflect the new architecture of the world,” Ms. Lagarde said, “but that should also reflect in our employment policies, in our training policies, in the way in which we build teams, in which we organize recruitment … .”
The first female head of the IMF, Ms. Lagarde promises to change a culture that had been dominated by men for years, even as she continues the World War II-era tradition of filling the managing director spot with a European.
While giving a fresh new face to the powerful and sometimes controversial international financial firefighting institution, Ms. Lagarde did not indicate any major changes in the way the IMF will seek to quell financial crises and address global economic imbalances from Greece and Portugal to China and Brazil.
She is expected to continue the programs established by her predecessor, Mr. Strauss-Kahn, to address a wide array of economic problems around the world.
“We are facing a turnaround that is very uneven,” she said, marked by fast growth in the developing world but slow growth and lingering debt and unemployment problems in the United States and other developed countries.
“The issue of sovereign debt concerns all advanced economies, ranging from Japan to the United States, but clearly with a focus on the Eurozone and in particular in the country of Greece,” she said.
“On the other hand, when we look at the emerging markets, we have in some corners the risk of overheating, and we have the risk of inflation.”
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