The head of the International Monetary Fund’s fiscal affairs department will resign after he was nominated for a job with Italian Prime Minister Enrico Letta’s government, the fund said.
Carlo Cottarelli, a fund veteran of 25 years, has notified the fund of his intention to leave, effective Oct. 22, the Washington-based IMF said in an e-mailed release. He was nominated to be commissioner for public spending reform in Italy.
Cottarelli “has been responsible for the development of the Fiscal Monitor, the IMF’s highly-regarded fiscal flagship.” IMF Managing Director Christine Lagarde said in the statement. “Under his guidance, the department has also played a central role in the fund’s very important technical assistance to member countries, currently providing approximately half of the fund’s technical assistance worldwide.”
Letta won confidence votes in parliament this week after former premier Silvio Berlusconi backtracked on a pledge to bring down the five-month-old government. Italy’s economy shrank in the second quarter while the economy of the 17-nation euro region returned to growth, and the country will miss its fiscal deficit target this year, Moody’s Investors Service said earlier this week.
Cottarelli’s new job “will cover the spending of public administrations, public bodies as well as the companies directly or indirectly controlled by the State that do not issue financial instruments listed on regulated markets,” Letta’s office said in a statement today. He will be able to order inspections and to seek the collaboration of Italy’s financial police, according to the statement.
Letta told the Italian Senate on Oct. 2 that he would ask Cottarelli to head a review of the country’s spending. That same day, Lagarde sent a memo to senior staff announcing Cottarelli’s decision to relinquish his responsibilities as director until a final decision was made.
The search for a successor will begin soon, and Sanjeev Gupta was named acting director in the meantime, according to the IMF.