Lagarde Wants to Heal 'Open Wounds' at IMF

Christine Lagarde said that she wants to fix the “open wounds” left by Dominique Strauss-Kahn’s departure from the IMF.

French Finance Minister Christine Lagarde is considered the top contender to replace Strauss-Kahn as IMF chief.
Yoshikazu Tsuno | AFP | Getty Images
French Finance Minister Christine Lagarde is considered the top contender to replace Strauss-Kahn as IMF chief.

“I am well aware that recent events have left open wounds,” the French candidate tipped to replace Mr Strauss-Kahn said in a statement to the IMF, which was published on its website Tuesday.

“I know that John (Lipsky)’s departure, coming as it does at the very worst of times, will leave a big hole. The incoming MD must take pains to show the outside world that this great institution is not only leading in terms of expertise, but also in terms of integrity and work ethics.”

Lagarde, who is up against Agustin Carstens of Mexico, said that she would change the composition of the IMF to reflect “changing economic realities”. At the moment, votes are weighted in favour of developed economies such as the US and Europe, rather than emerging markets.

This could help her gain credibility among emerging markets. One of the main arguments against her appointment is that it will not break the European stranglehold on the top job at the IMF.

A decision by the body’s governing board is expected on Thursday or even earlier.

If Lagarde, who would be the first female head of the IMF, is elected, she would have a full in-tray, topped by the second Greek bailout.

“The Fund has a lot on its plate with an uneven world recovery, the reopening of global imbalances, potentially destabilizing capital flows, high level of unemployment, rising inflation, and difficult country cases,” Lagarde added.

The current French Finance Minister and former lawyer insisted that euro zone countries would not get preferential treatment if she was in charge.

“If elected, I will have but one thing in mind when it comes to providing support to a euro-area member: ensuring full consistency with the Fund’s mission and providing for good stewardship of the Fund’s resources.”

“I will not shrink from the necessary candor and toughness in my discussions with the European leaders, on the contrary,” she added.

“There is no room for benevolence when tough choices must be made, and there is no option that does not start with difficult but necessary adjustments by the Greek authorities to restore the sustainability of public finances and to rebuild the country's competitiveness,” Lagarde added in her statement.