Lagarde, as sole candidate, has virtually assured five more years as IMF head

Friday, February 12th 2016 - 06:55 UTC

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Named to head the IMF in July 2011, Lagarde officially entered her nomination for a second term at the World Economic Forum in Davos, in January this year.

The International Monetary Fund (IMF) has nominated current managing director Christine Lagarde for the second term, IMF Executive Board Dean Aleksei Mozhin said in a statement on Thursday.

“The period for submitting nominations for the position of the next Managing Director closed on Wednesday, February 10,” Mozhin stated. “One candidate, current Managing Director Christine Lagarde, has been nominated.”

Named to head the IMF in July 2011 for five years, Lagarde officially entered her nomination for a second term at the World Economic Forum in Davos, Switzerland, in January this year.

British finance minister George Osborne formally nominated the center-right former French finance minister within minutes of the appointment process opening on Jan. 22. Endorsements quickly followed from France, Germany, Britain and Italy. On Wednesday, the United States Treasury Department also gave its official backing, meaning Lagarde, 60, is virtually assured a second five-year term.

More significantly, China, South Korea and Mexico also signaled they would support Lagarde, ensuring there would be no joint move by the big emerging economies to try to wrest the top IMF job from European hands.

In 2011, Lagarde still struggled to win a contest with several developing country candidates to take over the IMF as Europe was sinking deep into economic crisis. Her victory came amid criticism that the IMF's top job should not be locked down by a European, as it has since the institution was created in 1944.

Since then, Lagarde has kept the IMF involved in a series of financial rescues for Eurozone countries, notably Greece, despite misgivings in less developed states in Asia and Latin America.

Lagarde has also built consensus for China's Yuan to be added to the major reserve currencies used to calculate the Special Drawing Rights in which the IMF lends to its members. Moreover, she's managed to implement a reform of voting rights in the global lender of last resort to give greater weight to China and other emerging economies. The change was already agreed in 2010 but long held up by the US Congress.

Looking ahead at a possible second term, Lagarde said in Davos in January that a high priority would be working to integrate China fully into the global market economy. She urged Beijing to provide more clarity about its new exchange rate mechanism, linked to a basket of currencies rather than just the dollar.

She also noted that during her term the reform of the IMF's quota system had increased the lender's war chest. “This trend should continue. The IMF should continue to be large,” Lagarde said.

Being nominated as the sole candidate for IMF directorship will also help her master her next challenge, convincing the IMF board to continue to lend money in Greece's third bailout program. The IMF executive board is expected to name the next managing director by March 3.