Column: Time for a non-European IMF head

Apr 28 2014, 05:41 IST
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SummaryThe IMF needs a managing director with equal doses of technocratic and political skills

her presidential ambitions. But US hegemony is over in financial matters as it is in international relations, as Syria, and then, Crimea have shown. The global economy has changed shape during the last twenty years and it is about time IMF reflected this fact .

Whatever the case, the IMF and its friends must begin thinking about the succession. The reasons why the managing directorship should no longer go automatically to a European are even more obvious than three years ago. The emerging economies have traversed the Great Recession in better shape than the developed countries. They had better financial regulation. But they have been subjected to asymmetric shocks due to quantitative easing from the industrialised countries. First QE and now tapering have convulsed the emerging market economies. As Brazil has complained, the trade wars of earlier decades have given way to exchange rate protectionism. Raghuram Rajan, the new governor of the Reserve Bank of India, has urged developed countries’ central banks to take the emerging economies into their confidence to alert them to forthcoming policy shifts. This appears unlikely.

The IMF has not been as alive to the problems of the majority of its members as it should have been. It continues to be a US-Europe club. Let’s hope that, as the horse-trading starts on Lagarde’s successor, there will be other candidates from around the world. The important thing is to begin the global discussion on how the IMF can be better run—and who should run it. Summer 2014 offers the right opportunity. This discussion should start now.

I would like Tharman Shanmugaratnam, the Singapore finance minister, to be a candidate. He is thoughtful, technically competent and well respected—and he would hit the ground running. Shanmugaratnam is an IMF insider, the chairman (since 2011) of the International Monetary and Financial Committee, whose first chair was Gordon Brown, the former UK chancellor of the exchequer and prime minister. Shanmugaratnam is Singapore’s deputy prime minister and a previous chief executive of the Monetary Authority of Singapore (before he entered politics). He’s a member of the prestigious Group of Thirty. You cannot get a better CV than that for the job. In the past, when asked about the possibility that he might go for the position, Shanmugaratnam has shrugged his shoulders or murmured something self-deprecating. But if the possibility came into view, the Singapore government would no doubt take it very seriously.

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