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Lagarde Signals to IMF Staff More Power for Emerging Markets

Lagarde Signals to IMF Staff More Power for Emerging Markets
Jerome Bonnafont, French ambassador to India, left, looks on as Christine Lagarde, France's finance minister, center, shakes hands with Pranab Mukherjee, India's finance minister. Photographer: Graham Crouch/Bloomberg

Christine Lagarde signaled that as the new head of the International Monetary Fund she will follow through on a promise to increase the stature of emerging-market nations at the global lender.

Lagarde, speaking to IMF staff in a video message, distanced herself from her previous role as French finance minister and indicated she would advance efforts to give more voting power to countries such as China and Brazil, according to a transcript obtained by Bloomberg News yesterday. Her five-year term begins on July 5.

“The transformations that have taken place in relation to governance for instance, must be pursued, must be continued, so that the fund does belong to its 187 members,” Lagarde, 55, said. “I am not the director of a particular group of countries. I am the director of the entire institution.”

In the course of an election-style campaign that took her to Brazil, China and the Middle East, Lagarde promised to boost the clout of developing nations at the IMF. In doing so she garnered endorsements from emerging economies as well as European Union countries and the U.S.

Lagarde was selected over Agustin Carstens, Mexico’s central bank governor. Emerging markets failed to rally around a candidate from among their ranks, after calling for an end to Europe’s six-decade lock on the position.

Candidate Lagarde

As a candidate, Lagarde also said she would push for quick implementation of a 2010 agreement that makes China the third-strongest voice in the organization and gives more say to nations such as South Korea. The 2010 agreement also weakens the influence of advanced European economies, which pledged to reduce the number of seats they hold on the IMF’s 24-person executive board.

“I am very concerned that we can enrich the institution as much as we can by using diversity as an asset,” Lagarde said, according to the transcript of the video message. “Gender, geography, academic background, culture -- all that diversity should actually be mixed so well that it produces this unbelievable intellectual talent that you together can produce.”

Women accounted for 45.5 percent of the IMF’s staff and 21.5 percent of its managerial jobs at the end of 2010, according to the organization’s annual diversity report, which also called the number of employees from emerging-market countries “unacceptably small.”

Lagarde is the first woman to head the IMF. She replaces Dominique Strauss-Kahn, who resigned after his arrest last month on charges that include attempted rape. He has pleaded not guilty.

“I know that recent events have not been particularly pleasant for any of you nor for the institution as a whole,” Lagarde said to IMF staff, without mentioning Strauss-Kahn by name.

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