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Christine Lagarde deserves a second term at the IMF

Christine Lagarde deserves a second term at the IMF
Published 22 Jan 2016   Follow @hannahjwurf

On 3 March 2016, the IMF Executive Board will announce who they have decided to lead the Fund for the next five years. Christine Lagarde has announced she will seek reappointment after completing her current term. In the next few weeks, the Board will accept nominations from country directors and governors.

Lagarde will probably keep the job, and this is a good thing for the IMF.

The IMF managing director is both chairperson of the Executive Board and head of IMF staff. The job is one of leadership requiring 'managerial and diplomatic skills' and being 'an effective communicator'. 

Lagarde has been a strong figurehead for the Fund, both persuasive and articulate. She is known for her consultative style in working with IMF staff and partner organisations like the OECD.

She certainly has a better reputation for defending the IMF than some of her counterparts in other international organisations. Ban Ki Moon's gentle approach is often drowned out at the UN, Jean-Claude Juncker's technocratic style is not helping resuscitate the EU project and Jim Yong Kim has struggled to restructure the World Bank with great resistance from his own staff.

Lagarde's greatest achievement has been building stronger relationships between the Fund and the large emerging economies. She championed the 2010 IMF reforms and chastised Congress' failure to pass the reforms. She will end her term with the 2010 reforms finally passed and the yuan added to the special drawing rights basket. [fold]

A friendly approach to China has helped the independent reputation of the IMF, rather than being seen as in the pocket of the US. She has also championed the diversity of IMF staff.

Critics will point to the mistakes of the IMF under Lagarde's oversight, most notably the handling of Greece and Ukraine. But nobody expects that IMF policy would radically change with the departure of Lagarde. If anything, she has softened the reputation of the Fund for austerity through her rhetoric on inclusive growth, the empowerment of individuals in developing countries and promoting women in the global economy.

Other critics might call for a managing director from one of the large emerging markets (Lagarde is a French national and the deputy managing director is an American). The head of the Fund has always been a European. But her good relationship with the emerging economies and commitment to a more representative Fund stand in her favour.

The biggest risk to Lagarde's leadership is the corruption charges that link her to the Sarkozy Government in France when she was finance minister. If something serious comes out of this, she will be compromised.

But she remains the front-runner for the job with endorsements already from the UK, France and Germany, and praise from Joe Biden. It's unclear who her competition will be. Agustín Carstens, Governor of the Mexican Central Bank, was her chief rival five years ago, but will not run again

In the unlikely event that Lagarde doesn't keep the position, the UN top job is up for grabs at the end of the year. This could keep Kevin Rudd on his toes. 

Photo courtesy of Flickr user International Monetary Fund.

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