John Lipsky, the International Monetary Fund’s acting chief, said today that a new leader will be found by the end of next month, while he declined to comment on whether a U.S. citizen should keep the fund’s No. 2 slot.
In an interview with Pimm Fox on Bloomberg Television’s “Taking Stock,” Lipsky also said the bailout programs for Ireland, Portugal and Greece that the IMF co-funded with the European Union will produce results and avoid default if the plans are followed.
The measures attached to the loans for the three countries are “very detailed and quite strenuous” and “do not contemplate debt restructuring,” Lipsky said. “We are convinced that if the programs are fully implemented, that they will succeed in restoring economic health to these countries.”
The Washington-based IMF is seeking to find a replacement by June 30 for Dominique Strauss-Kahn, who resigned last week following his arrest on sexual assault charges in New York. Meanwhile, the bond-market selloff has been worsening across Europe.
More than a year after European policy makers approved a 750 billion-euro ($1.1 trillion) bailout blueprint to stem the sovereign crisis, bond yields in debt-laden peripheral countries are at record highs and officials are floating plans to extend Greek repayments. Italy had its credit-rating outlook put on negative review by Standard & Poor’s on May 20, hours after Fitch Ratings cut Greece three levels. Spain’s ruling party was routed in local voting yesterday.
Support mounted for French Finance Minister Christine Lagarde to head the IMF. In an interview with CNBC television today, Lipsky said she would make an “excellent” managing director.
“She’s done an excellent job as a finance minister and I’m sure she would be an excellent managing director,” Lipsky said today. He said other candidates who have been nominated and publicly mentioned also “all seem excellent names.”
Mexico has offered its central bank governor, Agustin Carstens, as an emerging-market candidate, challenging Europe’s 65-year hold on the job.
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. The deadline for nominating candidates is June 10.
Lipsky said the IMF staff and management play no role in the selection of the institution’s head. He said he’s confident the recruitment process outlined by the IMF board last week will lead to an “excellent” choice.
His own mandate as first deputy managing director ends Aug. 31 and he has said he doesn’t plan to renew it. The U.S. has traditionally picked the official holding the post.
Asked if the position should remain in U.S. hands, Lipsky said that “this is a choice that is left to the managing director with the approval and agreement of the executive board so I’ll leave that question to them.”