India plays waiting game on IMF post

By James Lamont in New Delhi

Published: June 7 2011 18:44 | Last updated: June 7 2011 18:44

India has withheld its public support for the bid by Christine Lagarde, France’s finance minister, to become the president of the International Monetary Fund.

After a meeting with Ms Lagarde in New Delhi on Tuesday, Pranab Mukherjee, India’s finance minister, said there was “no assurance” given to support the European candidate for the top job at the multilateral organisation.

India is seeking to build a consensus over the position rather than find itself at the centre of a standoff between developed and developing nations over the leadership of the IMF.

“We are working on a consensus,” Mr Mukherjee said, adding it was “difficult to say” whether there was agreement between Brics countries over a common candidate for IMF leadership.

Mr Mukherjee acknowledged that there was a difference of opinion over a South African candidate, likely to have been Trevor Manuel, a long-serving finance minister.

Mr Mukherjee is to hold talks with Agustin Carstens, a rival candidate for the IMF job, on Friday as the governor of Mexico’s central bank seeks to garner support from Asian nations. Mr Carstens is also hoping to meet Manmohan Singh, India’s prime minister.

“[India] wants the election of a managing director of the IMF to be on the basis of merit and competence and to be held in a transparent manner and not on any particular nationality. There should be a consensus,” Mr Mukherjee said.

Ms Lagarde described her meeting as “excellent”. She praised Mr Mukherjee for his “affection” and India’s strong bilateral relationship with France, partly based on Paris’s decision not to sanction New Delhi after its nuclear weapons tests in the 1990s.
Indian Finance Minister Pranab Mukherjee, left, greets his French counterpart Christine Lagarde in New Delhi, India
Indian Finance Minister Pranab Mukherjee, greets his French counterpart Christine Lagarde in New Delhi

The French finance minister had come to the Indian capital on an international roadshow to promote her candidacy in the wake of the controversy surrounding Dominique Strauss-Kahn, the former IMF chief in the US.

She earlier visited Brazil, where she similarly failed to receive an explicit endorsement but is well regarded by its leaders.

Ms Lagarde is well liked and highly respected among India’s top economic policymakers. Montek Singh Ahulwalia, the deputy chairman of India’s planning commission and the country’s economic ambassador in global forums like the Group of 20 nations, counts her as a personal friend.

Some analysts say the lack of consensus around a candidate from the emerging markets is strengthening Ms Lagarde’s chances.

Eswar Prasad, a professor at Cornell University in the US and an adviser to the IMF, said India would be likely to hold its firepower over the IMF job for a future bid by one of its own nationals. It would, in the meantime, seek to extract promises from Ms Lagarde to boost the voice of emerging economies at the IMF.

“India will want to extract two commitments from Lagarde. [These include] a more transparent process to determine the formula for setting countries' voting shares at the IMF and continued momentum on reforms that give emerging markets more voting rights and greater representation,” he said.

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