## Transcript of a Press Conference by Dominique Strauss-Kahn, Managing Director-designate of the International Monetary Fund, with Masood Ahmed, Director, External Relations Department, and Saleh Nsouli, Director, IMF Office in Europe

_IMF News, October 3, 2007_

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## Bibliographic details
- Published: October 3, 2007

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### Appointment and immediate context
- Dominique Strauss-Kahn was appointed Managing Director-designate of the IMF by consensus of the Executive Board following an open and competitive process.
- Nomination details:
  - Term length: five years, beginning on November 1, 2007.
  - Campaign travel: traveled more than 60,000 miles meeting leaders of major member countries.
- Transitional remarks:
  - Executive Board, Management, and staff intend to ensure a smooth transition until arrival in Washington.
  - Strauss-Kahn emphasized the need for relevance and legitimacy of the Fund in a changing global economy.

### Reform objectives and approach
- Overarching reform goals:
  - Make the Fund both relevant (adapt policies to today's problems) and legitimate (reflect new balance of power).
  - Reformulate Fund policies to promote growth, the highest levels of employment, development of trade, and financial stability (citing Article I of the Articles of Agreement).
- Process and timetable:
  - Strauss-Kahn sketched reforms but declined to define detailed plans unilaterally.
  - He intends to develop detailed reforms in consultation with staff, Management, and the Executive Board.
  - He deferred specific timing, noting ongoing negotiations on quotas by Rodrigo de Rato and the importance of outcomes before the Annual Meetings in late October.
  - Formal policy positions to be stated after taking office on November 1, 2007.
- Strategic emphasis:
  - Shift emphasis rather than seek a radical break; adapt the Fund to contemporary financial crises (e.g., subprime-related turmoil) and the broader scope of global financial challenges.
  - Prioritize surveillance, advice, crisis avoidance, and ensuring robust growth and employment.

### Quotas, representation, and legitimacy
- Key framing:
  - Quota reform is essential to legitimacy because emerging economies (Brazil, India, China, South Africa, Mexico, others) must have more voice and representation.
  - Strauss-Kahn described quota allocation as effectively a zero-sum game (shares must sum to 100 percent).
- Specific numeric references and examples:
  - Brazil's current quota: 1.4 percent.
  - Possible incremental increases mentioned illustratively: 0.2, 0.3, 0.4 percent (as examples of what Brazil's quota "could and should increase" by).
  - Even after increases to "1.6, 1.7, or 1.8 percent" Brazil would still be under-represented relative to its global weight.
  - Strauss-Kahn observed that most quota formulas yield an increase for the United States rather than a decrease; the United States has indicated it does not want to increase and would accept reverting to pre-Singapore shares.
- Political feasibility:
  - Some countries (notably certain European countries and Russia) will need to accept transferring part of their quota to emerging economies to achieve rebalancing.
  - Strauss-Kahn saw it as a central task (with staff and Board) to secure agreement among these countries; he emphasized that no solution exists without such transfers.

### Financing, income model, and institutional efficiency
- Revenue challenge:
  - Current IMF income derives largely from the spread on lending; as lending decreases, Fund income falls.
  - Need for a "permanent and steady-state financing system" has been examined (reference to the Crockett Report directed by Sir Andrew Crockett).
- Possible revenue and cost measures discussed:
  - Options include using gold reserves, altering revenue from Fund assets, and limiting or decreasing expense growth.
  - Strauss-Kahn stated: "95 percent of what is written in the Crockett Report is not a problem for me," while noting a slight difference on one specific point.
  - He indicated gold sales are possible but not sufficient alone.
  - Institutional downsizing and refocusing on core functions were raised as legitimate options; internal management has already launched measures toward expense control.
- Operational location and staffing:
  - Moving out of Washington or reducing headcount were mentioned as possible elements of cost-efficiency, but Strauss-Kahn advised a detailed, case-by-case approach rather than blanket percentage cuts.

### Regional priorities and relationships with member regions
- Latin America:
  - Acknowledged widespread mistrust of the IMF in Latin America rooted in past program designs (including Argentina).
  - Noted widespread support from Latin American representatives for his candidacy, reflecting hope for different Fund policies.
  - Emphasized adapting Fund policies to help people and avoid "unbearable remedies."
- Africa:
  - Noted African growth around 5 percent (described in question framing) and acknowledged uneven distribution of gains across countries.
  - Argued against a "one-size-fits-all" approach; called for policies tailored to historical, cultural, demographic, and political contexts.
  - Called for greater diversity among Fund staff to improve understanding and representation of African countries.
- Asia and China:
  - Observed emerging countries will likely drive world growth and stressed their greater role in decision-making.
  - On the renminbi (yuan): said valuation is a topic for multilateral discussion; cautioned against bilateral acrimony between the United States and China and advocated multilateral debate and solutions.

### Global outlook and threats
- Growth outlook:
  - Strauss-Kahn judged world growth foundations "currently solid" due to accumulated profits and structural adjustments.
  - He expected emerging countries to drive growth and anticipated that by end-2008 the world growth rate "will still be very respectable."
- Risks and recent financial tensions:
  - Noted the summer's crisis originating with subprime mortgages and its transmission into the banking sector, citing Northern Rock in the UK as an example.
  - Stated central banks have taken actions and the situation appeared "under control," while acknowledging uncertainty about short-term developments.
- Institutional role:
  - Emphasized the Fund's preventative role—success in crisis avoidance can render its contributions invisible—and the need to ensure adequate resources and credibility for surveillance and crisis prevention.

### Coordination with other multilateral institutions
- Boundaries and cooperation:
  - Acknowledged overlaps with the World Bank, UNDP, and WTO but argued overlaps are manageable and coordination is desirable.
  - Identified complementary mandates: World Bank focuses on project financing and long-term structural issues; IMF focuses on macroeconomic balance, fiscal and foreign exchange issues.
  - Expressed intent to work closely with counterparts (e.g., World Bank, UNDP, WTO) rather than seeking hegemony.
- Outreach priorities:
  - Three stated priorities for outreach: cross 19th Street (to the World Bank), cross the equator (to Latin America), and cross the Pacific (to Asian countries).

### Governance, values, and personal stance
- Political background:
  - Strauss-Kahn identified himself as a Socialist but stressed that this has no adverse implication for IMF leadership; described himself as a "free-market socialist."
- Social justice:
  - Argued there is no contradiction between economic growth and social justice; both are mutually reinforcing and should be central to IMF policies.
  - Emphasized adapting corrective policies to account for social impacts and the "happiness of the people."

*Transcript of a Press Conference by Dominique Strauss-Kahn, Managing Director-designate of the International Monetary Fund, with Masood Ahmed, Director, External Relations Department, and Saleh Nsouli, Director, IMF Office in Europe (October 1, 2007).*

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## References

- [Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)
- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [Spain and the IMF](http://www.imf.org/external/country/ESP/index.htm)
- [France and the IMF](http://www.imf.org/external/country/FRA/index.htm)
- [India and the IMF](http://www.imf.org/external/country/IND/index.htm)
- [Mexico and the IMF](http://www.imf.org/external/country/MEX/index.htm)
- [Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [Gold in the IMF -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2022/gold-in-the-imf)
- [IMF Quotas -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2022/imf-quotas)
- [The IMF and the World Trade Organization -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2022/imf-and-the-world-trade-organization)
- [Transcripts](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Webcast](https://www.imf.org/external/mmedia/view.asp?eventID=891)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr071001_