Abu Dhabi, UAEFriday 13 December 2019

Christine Lagarde resigns from IMF after 'clarity' on ECB presidency

David Lipton to lead the Washington-based lender as it looks for permanent replacement for Ms Lagarde

The euro zone needs to create more of its economic growth at home, European Central Bank President Christine Lagarde said on Friday EPA 
The euro zone needs to create more of its economic growth at home, European Central Bank President Christine Lagarde said on Friday EPA 

International Monetary Fund managing director Christine Lagarde stepped down from her post saying she has “clarity” about her nomination for the top job at the European Central Bank.

Ms Lagarde’s decision to leave the Washington-based lender follows the European legislature’s approval to appoint German Defence Minister Ursula von der Leyen as European Commission president. If Ms Lagarde’s appointment is also endorsed, it will be the first time two women will hold two of the top positions in the EU.

The European parliament will hold a nonbinding vote on Ms Lagarde’s appointment, which is expected to be finalised by EU leaders at a regular summit on October 17 and 18.

“With greater clarity now on the process for my nomination as ECB president and the time it will take, I have made this decision in the best interest of the Fund, as it will expedite the selection process for my successor,” Ms Lagarde said.

IMF’s executive board said it would “initiate promptly” the process of selecting the next managing director and would communicate in a timely fashion. David Lipton will remain the acting managing director of the lender until a permanent replacement of Ms Lagarde is found, it said.

The IMF chief has already met the lender’s executive board and her resignation will be effective from September 12, however, “relinquishment” of her responsibilities as managing director, announced earlier, will remain in effect until she formally leaves the organisation, she said in a statement on Tuesday evening.

The IMF succession is expected to be a major topic of discussion among G7 finance ministers and central bank governors at their meeting on Wednesday and Thursday in Chantilly, France, amid concerns that slowing global growth and trade conflicts will pressure vulnerable economies, according to Reuters.

On the sidelines of the G7 meeting, the Bank of England Governor Mark Carney, who is Canadian, is due to meet US Treasury Secretary Steven Mnuchin, who wields strong influence over the IMF’s leadership, Reuters reported. Mr Carney is considered a leading candidate to replace Ms Lagarde.

The former UK chancellor of the exchequer George Osborne is also said to be considering putting himself forward for the job. Mr Osborne, who is currently editor of London newspaper the Evening Standard, told friends he believes his connections with the US and China will give him a fighting chance of being nominated, the Financial Times reported.

He led Britain’s finance ministry for six years until he was sacked in 2016 after the country voted to leave the European Union.

The IMF, which is made up of 189 countries, was established in 1945 in the aftermath of the Second World War and co-ordinates international financial policy, in some cases acting as a lender to countries to help them overcome their economic and financial difficulties.

Traditionally the top job at the IMF goes to a European, while an American is usually placed as head of the World Bank.

Known as the “rock star” of the finance world, Ms Lagarde took over as head of the IMF in 2011. A strong advocate of women’s empowerment, she is France’s first female finance minister and steered the country through the global debt crisis in 2008. She is a lawyer by education and has held several important posts within the French government during her political career.

The biggest task for Ms Lagarde as the head of ECB will be to revive the ailing eurozone economy.

Updated: July 18, 2019 04:10 AM

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