Mexico to Present Carstens as Candidate for Top Post at IMF

Mexican Central Bank Governor Agustin Carstens
Mexican central bank Governor Agustin Carstens. Photographer: Andrew Harrer/Bloomberg

Mexico central bank Governor Agustin Carstens will be presented as a candidate for managing director of the International Monetary Fund, the Finance Ministry said in an e-mailed statement today.

The process to choose a new leader at the IMF should be “open, transparent and based on merit,” the ministry said. Finance Minister Ernesto Cordero will present Carstens’ candidacy, the statement said. The government will likely nominate Carstens tomorrow, said Ricardo Ochoa, head of international affairs at the ministry, in a phone interview.

With Carsten’s nomination, Mexico joined Australia, China and other nations in calling for the new managing director of the lender to be chosen because of merit and not the convention that the position should go only to Europeans. Australian Treasurer Wayne Swan said May 22 the position shouldn’t be “limited” to any one nation or continent.

The Washington-based fund plans to complete its search for a managing director by June 30 to replace Dominque Strauss-Kahn who was indicted May 19 in New York on charges including attempted rape. Carstens served as deputy managing director of the fund from 2003 to 2006.

Carstens became central bank governor in January 2010 after Guillermo Ortiz stepped down. Carstens, who has a doctorate in economics from the University of Chicago, served as finance minister starting in 2006, where he led the nation’s response to the global financial crisis. Mexico was the first nation to request a flexible credit line from the IMF, a mechanism to help support economies seeking strong macroeconomic policies.

Voting Power

Mexico leads a group of eight countries with 117,045 votes, or 4.66 percent of the total IMF voting power, according to the multilateral lender’s website. The group is the seventh largest, measured by voting power, behind the U.S., Japan, Germany, France, the U.K. and 10 nations led by Belgium.

Carstens, a Chicago Cubs baseball fan, led Mexico’s response to the global financial crisis as finance minister since 2006. As chief economist for the central bank from 1994 to 1999, he co-wrote a paper in which he pushed for market participants to have broader access to central bank data. Under Carstens, the central bank published the minutes of policy meetings for the first time this year.

Flexible Credit

The IMF renewed and boosted Mexico’s flexible credit line to $72 billion in January, replacing the one-year $48 billion facility. Mexico first sought the line in 2009 to bolster confidence in the economy, which contracted the most since 1995 that year. Colombia and Poland were the only other two nations to enter similar agreements with the IMF, which the lender said were reserved for nations with strong economic policies.

The economy grew 5.5 percent last year, the fastest growth in 10 years, and may expand as much as 5 percent this year, Carstens said on May 11. Policy makers boosted their forecast for growth this year without changing their forecast for inflation of 3 percent to 4 percent. Annual inflation slowed to 3.36 in April, near the 5-year low set in March and half that of Brazil. The central bank has a target of 3 percent inflation.

Mexico has been buying as much as $600 million dollars monthly through dollar options since March 2010, boosting foreign reserves rose to a record $125.8 billion this year, according to the central bank.

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