The new head of the International Monetary Fund (IMF), Bulgaria’s Kristalina Georgieva, has said that the global economy should be prepared to handle another fresh round of economic downturn.
She has been chosen to head the Washington-based organization amid a host of problems to the global economy including a slowdown in growth, growing trade spats and record levels of debt, said the economist.
The choice of Georgieva to replace the outgoing head of the IMF France’s Christine Lagarde was made unanimously even though there are criticisms that the United States and Europe get to decide on the selection of people for the top job at the IMF, which provides funds for economies in distress and crisis, as well as to its sister organisation, the World Bank, which had been set up with the aim of alleviating poverty from the world.
“The IMF is a unique institution with a great history and a world-class staff. I come as a firm believer in its mandate to help ensure the stability of the global economic and financial system through international cooperation. Indeed, in my view, the Fund’s role has never been more important,” Georgieva said in a statement.
At a time when the global economy is experiencing a slowdown in growth, increasing trade tensions between countries and regions and debt levels reaching historic levels, her job as the head of the IMF presented a “huge responsibility”, Georgieva added. The long term objectives of the IMF included “dealing with issues like inequalities, climate risks and rapid technological change,” she said.
A former number two at the World Bank, Georgieva is set to take over the reigns of the IMF for a period five years starting next week even as the annual general meeting of the organization is to be held in later in next month.
It is expected that the annual meeting of the IMF which will be attended by finance ministers and central bank governors from all of the member countries of the body would be dominated by efforts to find solutions to ward off the threat presented by a possible global recession, ways to reduce the tensions of the trade war between the United States and China and reduce the impact of a no-deal Brexit as well as the threat of global oil supplies because of rising tensions in the Middle east.
It is also expected that the representatives of the member countries of the IMF would also question the decision of the outgoing chief Lagarde about her decision to approve a record $56bn loan to Argentina as the South American country hangs precariously close to a debt default.
Conventionally, the choice of the head of the World Bank has been awarded to the United States while the head of the IMF is chosen by European powers according to a tacit agreement between the two that was arguably arrived at the Bretton Woods conference in 1944.
“We congratulate Kristalina Georgieva and trust she will be a strong voice in the fight against inequality and an advocate for climate action and gender equality. These issues, which impact heavily on growth, stability and poverty, require strong political leadership from the IMF now, more than ever,” said Nadia Daar, the head of Oxfam’s Washington DC office.
But Daar also added, while raising concerns about the absence of a non-European candidate, that: “We can’t overstate the importance of improving the selection process for IMF managing director. The IMF’s board calls it ‘open, merit-based and transparent’, but it is too politicised for a non-European candidate to be nominated or succeed. The status quo undermines the legitimacy of multilateralism at a time when we should be demonstrating its strength.”
(Adapted from TheGuardian.com)