The IMF needs a bridge-builder at the helm – that’s what it looks set to get
September 20, 2019 Otaviano Canuto - Principal, Center for Macroeconomics and Development
If appointed, the Bulgarian-born economist Kristalina Georgieva will be the first managing director of the IMF to come from Eastern Europe The world economy is in a fragile state, with heightened trade tensions and worries of rising debt leading to a global downturn. After a decade-long expansionary cycle, the IMF’s top priority must be to minimize the risk of crisis.
In doing so, the IMF must continue to strive to represent the interests of the whole world. It needs to stay relevant and reflect the changing balance of world economic power. That requires a leader with a deep understanding of both advanced and emerging markets, and who can build bridges between both.Visionary leadership is essential to forge international collaboration and reach broad and inclusive agreement on policies that will ensure stability and promote growth.
There was only one nominee as the period for submitting nominations for the position of the next Managing Director closed last Friday, September 6. Ms. Kristalina Georgieva, currently Chief Executive Officer of the World Bank, and a Bulgarian national, has confirmed willingness to be considered as a candidate. She would be the first managing director of the IMF to come from Eastern Europe. Unusually, she is a candidate from and of the emerging markets who also has deep experience leading European and global institutions.
Moreover, when traditional alliances are fraying, Georgieva brings a strong track record of forging the consensus now urgently needed to safeguard the world against fragmentation. As a member of the Board of Executive Directors of the World Bank at the time, I witnessed how Ms. Georgieva worked with the U.S. Administration and other World Bank shareholders to deliver a $13 billion capital increase, the largest funding increase in the World Bank’s history.
Should a major global downturn come to pass, the IMF needs to be ready to act decisively, and with the support and backing of its members. Ahead of that, the Fund should strengthen its surveillance of the global economy and markets. And, as a key component of the global financial safety net, the IMF should deepen its co-operation with other regional financial-security mechanisms, including development banks.
To build more resilient economies, the IMF must step up its work to meet the world’s major economic challenges like climate change and inequality. With the right policies, countries at different levels of development can spur inclusive and private-sector-led growth, generate jobs and manage technological transition.
These are issues that the next IMF head must prioritize, alongside expanding its ability to help its poorest members. The Fund already has a deep presence in low-income countries – Africa is home to the highest number of IMF programs – because these are often the economies most at risk of debt distress.
The maintenance of global stability will require the participation of all economies and consensus among the IMF’s diverse global membership. Many emerging economies, including those of Indonesia, Cote d’Ivoire and Rwanda, support the inclusive and strong voice that Ms. Georgieva would give them.
Under her leadership, the World Bank has prioritized building resilience, including measures to protect poor countries against climate shocks, and is finalizing its first strategy for fragile, conflict- and violence-affected states. And in more advanced economies, Ms. Georgieva has promoted investments in health, education and public services that will help countries meet the challenges of a new digital economy.
As a leader who has proved her commitment to defending an open world economy, Ms. Georgieva spearheaded joint World Bank/IMF work on debt transparency and sustainability.She will be a strong advocate for all economies, and for the policies needed to prevent further global fracture, stimulate growth and help more people fulfil their potential.
Otaviano Canuto is a non-resident senior fellow at Brookings Institution and a senior fellow at the Policy Center for the New South. He is a former Vice President and Executive Director at the World Bank, and a former Executive Director at the International Monetary Fund.