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Tharman Shanmugaratnam on shortlist to become next IMF chief

The Independent logo The Independent 4/7/2019 Anna Maria
Tharman Shanmugaratnam, Christine Lagarde are posing for a picture © Provided by Apple Seed Pte Ltd

Singapore — It looks as though Christine Lagarde, who has been serving as the Managing Director and Chairwoman of the International Monetary Fund since 2011, may be leaving her post soon, and the Singapore’s own Tharman Shanmugaratnam, currently a Senior Minister, may be stepping up to the plate.

Ms Lagarde was nominated as the President of the European Central Bank (ECB) on July 2, Tuesday, to outgoing Mario Draghi, and the New York Times (NYT) reported that she is looking to step down from heading the IMF while the ECB nomination is being carried out.

But the question that the NYT posed is whether or not the United States will actually endeavour to get an American to succeed Ms Lagarde. While the World Bank is traditionally chaired by an American, and the IMF, a European, some experts believe that US President Donald Trump may seek to defy this tradition.

Aside from Mr Tharman, who served as the IMF’s chairman of the International Monetary and Financial Committee, the other names on the shortlist of possible IMF heads are a former deputy managing director of the monetary fund, Agustín Carstens; and the former chief executive of Pimco, Mohamed El-Erian.

The next head of the IMF will be facing definite challenges at a time of economic slowdown and greater protectionism because of inning trade tensions, particularly due to actions from the United States, as well as serious economic difficulties in countries such as Argentina, Venezuela, and Turkey.

According to Eswar Prasad, the former head of IMF’s China division, “The key challenge for the next IMF head is how to maintain the institution’s relevance, influence, and legitimacy in a world where multilateralism is breaking down amid trade tensions and shifting geopolitical alliances.

The IMF is the epitome of multilateralism in international finance, but it suffers from marginalisation by the key advanced economies, a pool of resources dwarfed by global capital flows, and lack of trust among emerging market economies.”

The fund’s Managing Director is appointed into the position via consensus from its 24-member executive board.

The NYT article quoted the president of the Institute of International Finance, Tim Adams, as saying, “I suspect the Europeans are scrambling as we speak to ensure that Europe retains that position.”

A fourth possible nominee for the position is rumoured to be the departing governor of the Bank of England, Mark Carney. However, with the UK just about to leave the EU, it may be possible that Mr Carney would be considered to be a European Managing Director.

Whoever is the next IMF head will have big shoes to fill. Ms Lagarde took over the position from the scandal-ridden Dominique Strauss-Kahn, who had been charged with attempted rape and imprisonment of a hotel Sofitel employee, and later convicted on seven charges: two counts of a criminal sexual act, two counts of sexual abuse, and one count each of attempt to commit rape, unlawful imprisonment and forcible touching.

Ms Lagarde’s term at the fund has been widely considered a success, as she was able to lead Europe through a debt crisis and improve transparency at IMF.

Vasuki Shastry, an associate fellow for the Asia-Pacific programme at Chatham House and who worked at IMF for several years, said, “This time around, they’re really building on Christine Lagarde’s reputation. Someone of international stature, well known in the economics community.”

Mr Tharman may just be the best person for the job. / TISG

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