Australian Treasurer Wayne Swan and South African Finance Minister Pravin Gordhan, who jointly chair a G20 committee on reform of the IMF, said the convention that the fund’s managing director was a European was already out of date and proposes the basis for the appointment of the next IMF chief.
The finance ministers of Australia and South Africa said in a joint statement said that the next IMF chief and the one who replaces Dominique Strauss-Kahn should be determined based on merit and not on nationality.
They were both referring to the G20 agreement adopted in Pittsburgh, USA in 2009 that called for an open selection process for the IMF chief, saying that agreement should be honored.
They said: “The global financial crisis demonstrated that the world needs a strong IMF and a strong managing director. For too long, the IMF’s legitimacy has been undermined by a convention to appoint its senior management on the basis of their nationality.”
They both added: “In order to maintain trust, credibility and legitimacy in the eyes of its stakeholders, there must be an open and transparent selection process which results in the most competent person being appointed as managing director, regardless of their nationality.”
The financial institutions created by the 1944 Bretton Woods conference have operated for 60 years under an informal but rigidly adhered to rule that the IMF is headed by a European while an American leads the World Bank.
Separately, Swan pointed to the increasing importance of emerging economies, particularly in Asia, as a reason for considering non-Europeans for the post.
Swan wrote in a regular economic note: “The tradition of automatically appointing a European to the role is one that’s long past its use-by-date given the shift of global economic weight to emerging economies, particularly in Asia, over the past few decades.”
Australia will not be pushing its own candidate to become the next managing director of the International Monetary Fund, instead campaigning for an appointment on “merit” because the convention of appointing Europeans is out of date.
The Treasurer, Wayne Swan, is believed to have decided Australia’s push for reform in the fund’s appointment processes would be stronger without an Australian candidate. Names that are said to floating for the next IMF chief speculations include Kevin Rudd, Ken Henry and Peter Costello.
The IMF has guaranteed transparency in the selection process, saying it will choose by the end of June the most qualified candidate to succeed Dominique Strauss-Kahn, who resigned days after his arrest inNew York on May 14 on charges of sexual assault.
Any of the IMF’s 187 member nations will be able to nominate candidates until June 10.
The IMF’s second-in-charge, John Lipsky, has been named acting managing director. Mr. Lipsky is a former chief economist at JPMorgan Chase, and was scheduled to retire in August.