(Bloomberg News) Support mounted for French Finance Minister Christine Lagarde to head the International Monetary Fund as Mexico offered its central bank governor as an emerging-market candidate, challenging Europe's 65-year hold on the job.
U.K. Chancellor of the Exchequer George Osborne said in a May 21 statement his nation will back Lagarde to become the first woman to head the Washington-based lender. German Chancellor Angela Merkel said consensus was emerging in Europe for her to get the post, Deutsche Presse-Agentur reported two days ago.
Nations from Australia to Brazil are urging a selection determined by "merit" rather than nationality, and Banco de Mexico Governor Agustin Carstens offered a veteran IMF candidate for emerging markets to rally around. Developing countries have so far shown little evidence of coordination, with Thailand, Russia and South Africa supporting policy makers from their own parts of the world.
"Lagarde might be front-runner," New Zealand Prime Minister John Key said in an interview with TVNZ television today. "She's super impressive I've got to say," he said, while echoing officials outside of Europe in calling for a selection "on merit."
The IMF, which provided a record $91.7 billion in emergency loans last year and accounts for one-third of the euro-region's bailout packages, has promised transparency in the selection process, saying that by the end of June it will choose the most qualified candidate. Managing Director Dominique Strauss-Kahn resigned last week to wage a legal battle over sexual-assault charges in New York.
Mexican Finance Minister Ernesto Cordero will likely present Carstens's candidacy today, Ricardo Ochoa, head of international affairs at the ministry, said in a telephone interview.
Carstens, 52, was a deputy managing director of the IMF from 2003 to 2006, going on to serve as Mexican finance minister until taking the helm of the central bank in January 2010. Mexico, the first nation to request a flexible credit line from the IMF, a mechanism to help support economies pursing strong economic policies, leads a group of eight nations with 4.66 percent of the total IMF voting power, the fund's website shows.
At Banco de Mexico, Carstens, who has a doctorate in economics from the University of Chicago and is a Chicago Cubs baseball fan, has overseen an increase in transparency. Minutes of policy meetings were published for the first time this year.
"Carstens obviously has all the technical preparation and the experience to be a very good director" of the IMF, said Gabriel Casillas, chief Mexico economist at JPMorgan Chase & Co. in Mexico City. "Despite him meeting all the criteria, we think it will be pretty hard for him to be picked. The gentlemen's agreement between Europe and the U.S. about the World Bank and the IMF will continue."
Under an informal postwar deal, Europeans have always headed the IMF, with Americans picking the World Bank president. Treasury Secretary Timothy F. Geithner said in a statement three days ago the U.S. will support a candidate who can command "broad support," and reiterated his call for a quick decision.
"What the leader mustn't be is simply a figurehead of a pure European and U.S. 'deal,'" Jim O'Neill, chairman of Goldman Sachs Asset Management, wrote in a note to clients. "If the IMF ends up with European leader, that person will have to face the additional burden of being regarded as such a product, adding to his or her challenges."