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IMFSurvey Magazine: In the News

NEXT MANAGING DIRECTOR

Strauss-Kahn to Press Ahead on IMF Reform

IMF Survey online

October 1, 2007

  • Strauss-Kahn says he wants to ensure IMF will be relevant, useful
  • Will champion reform of the IMF, including country representation
  • Says IMF will also need to carefully examine its own size, functions

Dominique Strauss-Kahn, recently selected to take over as head of the IMF in November, says that he will press ahead with reform of the 185-member international institution that helps oversee the global economy.

Speaking at a Paris press conference on October 1, carried live on the IMF's website, he stressed that the IMF is at a turning point in its existence when the Fund must adapt to the problems of today, including globalization, new types of economic crisis, and changes in the balance of power within the global economy. "I defined myself as the candidate for reform. Now I'm the designated managing director for reform. What I want to do after November 1 is to really be the managing director for reform," he declared.

The former French Minister of the Economy, Finance, and Industry (1997-99), known by his initials DSK, was selected September 28 as the next IMF Managing Director. The IMF's Executive Board said it had selected Strauss-Kahn, 58, by consensus to succeed Rodrigo de Rato for a five-year term beginning November 1. The IMF Board had considered two candidates after de Rato's June 28 announcement that he intended to leave the institution at the end of October.

Strauss-Kahn, a French national, was nominated by IMF Executive Director for Germany Klaus Stein on behalf of the European Union. Josef Tosovsky, a Czech national and former Czech prime minister and central bank governor, was nominated by Executive Director for Russia Aleksei Mozhin.

Need to adapt

Strauss-Kahn—who said he had had logged about 60,000 miles (100,000 kms) in recent weeks as part of a world tour to build up support for his candidacy in developing and developed countries—told reporters that he wanted to ensure that the IMF, founded toward the end of World War II, would be a relevant and useful institution in today's globalized economy. "We don't need less multilateralism, we need more multilateralism. We don't need less IMF, we need more IMF," he said, after a meeting earlier in the day with French President Nicolas Sarkozy."

But he noted that the IMF would not survive without change. It would have to adapt and ensure greater representation for emerging market countries that are taking on a bigger role in the world economy. To be relevant, it would also need to carefully examine its own size and functions, cut back its expenses and put its sources of income on a firmer footing.

Strauss-Kahn underscored that de Rato had done a lot to initiate reform of the institution, including increasing representation within the Executive Board for four dynamic economies, Brazil, China, Korea, and Mexico. Going forward, he said, any reform of the IMF's voting structures will not diminish the weight of the United States, the IMF's largest member. Rather, he added, Europe and Russia might have to see their own weighting cut back.

As for the global economic outlook, he said that despite the credit crunch in the United States that has roiled global markets, he still expected the world economy to perform solidly this year. The IMF will publish its latest forecast for the global economy on October 17.

Reactions to appointment

De Rato welcomed Strauss-Kahn's selection, noting in a statement that he had known and worked with Strauss-Kahn for many years. "I know he possesses the experience, vision, and dedication to public service needed to successfully lead the IMF at this important juncture," de Rato said. He also expressed appreciation to the Executive Board for having conducted the selection "through a transparent and competitive process."

World Bank Group President Robert B. Zoellick congratulated Strauss-Kahn on his appointment, saying he looked forward to enhancing cooperation between the IMF and World Bank. "This partnership is crucial to ensure that developing countries receive the best possible support, advice, and financial services," Zoellick said. "Our cooperation is important to ensuring globalization becomes more inclusive and sustainable so more people will share in the benefits of improved economic growth."

The Managing Director is the chief of the IMF's operating staff and Chairman of the Executive Board. He is assisted by three Deputy Managing Directors.


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