MercoPress. South Atlantic News Agency

Dominique Strauss-Kahn takes IMF helm in reform storm

IMF new chief Strauss-Kahn

Frenchman Dominique Strauss-Kahn takes the helm of the International Monetary Fund on Thursday on a critical mission: to restore the aging institution's relevance and finances.

Created to promote global financial stability, the IMF finds itself 63 years later out of step with the times and subsequently strapped for cash. Interest from loans is drying up for what used to be the lender of last resort for troubled economies, as potential borrowers turn to other, easier sources of cash in a robust world economy. Developing nations, the engines of global economic growth in recent years, have bitterly complained against the Fund's strict lending conditions and scant representation in the 185-nation institution, controlled by rich Western economic powers. Incoming managing director Strauss-Kahn, 58, a former Socialist finance minister of France, has pledged to make reform the core of his stewardship "without delay." He succeeds Rodrigo Rato of Spain, who resigned after the IMF and World Bank annual meetings October 20-22 in Washington, nearly two years before his five-year mandate ended, citing personal reasons. Rato's abrupt departure comes in the middle of critical reforms he himself launched in 2005. On the closing day of the annual meetings, Rato underscored the importance of the progress achieved on the reform of the organization, particularly on governance, surveillance and the IMF's finances. "Of course, the reform process now needs to be completed, and we should not underestimate the challenge involved or the commitment required. But I believe that members will rise to the challenge," Rato told the IMF board of governors. A day earlier IMF policymakers, under pressure, had approved internal reforms to give under-represented non-Western countries a stronger voice and agreed that the Fund must shore up its shaky finances, pledging to cut costs and boost efficiency. The IMF lost about 110 million dollars in its fiscal year ending April 30, and ratings agency Standard & Poor's recently predicted that it would lose twice that amount in fiscal year 2008 if it continues "on current trends." In a final statement, the policy-setting committee said reforming the IMF "should enhance the representation of dynamic economies, many of which are emerging-market economies, whose weight and role in the global economy have increased." Such countries should see their voting share increased, the committee said, adding that "the voice and representation" of poor countries would also be strengthened.