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Despite our best efforts to ensure an open, transparent and merit-based process for the selection of the IMF managing director, the multilateral institution is once again led by a EU national.

We say goodbye for now but we will keep our eye in future leadership races and will keep advocating for a democratic process. See you soon!


Drum roll please… The IMF selects another European managing director

Dear readers and contributors,

In spite of significant opposition from civil society and ex-IMF staff, it was announced on 25 September that another European will be the new IMF managing director, signalling that the illegitimate, undemocratic ‘gentleman’s agreement’ – which has ensured for 75 years that the head of the Fund is a European and the World Bank president is a US national – is still alive and well.

After a turbulent selection process, Kristalina Georgieva, a Bulgarian national, was the sole nominee for the position and was appointed, as noted by Reuters, following an interview on the 24 September, followed by a vote from the IMF executive board today.  

The decision to uphold the gentleman’s agreement with the appointment of yet another European managing director flies in the face of the IMF’s stated commitment “to an open, merit-based, and transparent process for selecting management”.

Bending its own rules to preserve an illegitimate process

Since 1951, the Fund’s by-laws have prohibited the appointment of a candidate aged 65 or over as Managing Director and have further banned the managing director from serving past their 70th birthday. The appointment of Georgieva, who is 65 years old, meant that the Fund had to change its own rules to safeguard the shameful gentleman’s agreement.

It was reported in the Financial Times on 26 July that France had floated the idea of changing the age limit, but that the idea did not attract support from the board at the time. The article added that, “Nonetheless, people familiar with the matter said the age limit could still be tweaked at a later stage if Ms Georgieva emerged as the board’s choice.”

On 21 August the IMF board issued a statement noting that, “The Executive Board has today recommended that the IMF Board of Governors vote to remove the age limit that currently applies to the position of IMF Managing Director”, which was followed by a 5 September statement noting that, “The Board of Governors has approved the proposal by the Executive Board to remove the age limit for the position of IMF Managing Director.” Rules, it seems, can be changed…

Opposition from outside and within ignored

In August, over 100 civil society organisations, trade unions and prominent academics signed an open letter to the IMF, labelling the ‘gentleman’s agreement’ “undemocratic, illegitimate, and rooted in neo-colonial principles,” and demanding change.

The letter noted that, “It is high time to end the ‘gentleman’s agreement’ and replace it with a genuinely open, democratic, merit-based, transparent process, that goes beyond rhetorical commitment, and allows candidates, regardless of nationality, to be put forward on an equal footing.” It continued, noting that, “In line with longstanding civil society demands, we believe that no country – or indeed bloc of countries – should wield excessive power in this process” and concluded that, “The IMF leadership race coincides with the 75th anniversary of the creation of the Bretton Woods Institutions. 75 years is enough – it is time to end the ‘gentleman’s agreement’”.

The letter was followed up by another – this time from former IMF staff members – endorsing demands of the original one. Theirs, which was signed by former staffers Mark Allen, George Kopits, Chris Crowe, Chris Marsh, Peter Doyle, Tom Bernes, and Gabriel Sterne, stated, “The current process, by ruling out non-Europeans, deprives the institution of talent and independence for this globally critical role, compromises legitimacy, and fails to meet the anticorruption standards the IMF itself rightly advocates for all such appointments made domestically by its member states.” It called on all IMF member states large and small, “to renounce the current appointment process now” and called specifically on Georgieva to “withdraw in the greater interest of the institution she aspires to serve.”

The concerns and demands from a huge swath of global civil society organisations, trade union and prominent academics, as well as former IMF staff members were however ignored.

2019: Double blow to Bretton Woods Institutions’ legitimacy amid a crisis of multilateralism

In April this year, despite the commitment of the World Bank’s executive directors to ensure an open, transparent and merit-based process for the selection of its new president, and despite widespread demands to end the gentleman’s agreement, the World Bank once again appointed a US national. The only other candidate put forward was Ziad Hayek, who was nominated by the Lebanese Government, but who then subsequently withdrew the nomination, with Hayek claiming that this was due to pressure from “other governments”.

The developments rest amid a turbulent crisis of multilateralism that has the potential to threaten the very existence of institutions like the IMF and World Bank. From Brexit to Trump and Bolsonaro, recent opposition to status quo multilateralism has primarily taken the form radical right movements, while China’s increased role as a global creditor continues to provoke hostility from other major economies and puts pressure on the relevance of the Bretton Woods Institutions.

Seldom was this crisis more evident than the near inability of Europeans to select a sole candidate – something that is ordinarily done quietly, behind closed doors. Instead, Europe’s selection process was riddled with fractures. On 8 July, Bloomberg reported that European finance ministers saw it is as a “priority” for them to put another European in place at the IMF, in the words of French finance minister Bruno Le Maire, “without useless rivalries”.

However, by 23 July, European officials were reportedly at odds over the IMF leadership nomination process, and on 26 July, Europeans put out a list of five candidates for the EU nomination: Spanish Economy Minister Nadia Calvino, Portugese Finance Minister Mario Centeno, former Dutch Finance Minister Jeroen Dijsselbloem, Bank of Finland Governor Olli Rehn, and Georgieva. After Le Maire asked Germany for help in coordinating the EU IMF leadership bid, an extended deadline for the vote and an abstention from the UK, Georgieva was finally selected as the European candidate on 2 August.

So, who is Kristalina Georgieva?

According to her LinkedIn profile, Georgieva did a master’s and PhD at The University of National and World Economy in Sofia, Bulgaria. After a brief stint in environmental economics consultancy, Georgieva worked at the World Bank during the 1990s in environmental economics with a focus on East Asia and Pacific Region. She went on to work at the European Commission in the mid 2000s as vice-president in charge of budget and human resources and European commissioner for international cooperation, health aid and crisis responding, before becoming chief executive officer of the World Bank Group in January 2017.

The struggle must go on

Now that the leadership race is over, we hope to count on your continued support in holding Georgieva to account for the actions of the IMF, and pushing for a global economic system that operates on the primary principles of justice, equity, gender equality, human rights and environmental sustainability, with international institutions that are democratic, inclusive, transparent, accountable, and responsive to citizens, especially the poorest and most vulnerable.

Whatever the challenges and geopolitical realities, we strongly believe that the World Bank and IMF must change their leadership selection processes so that both institutions have leaders with the required skills and experience, selected through an open, fair and transparent process.

Until next time…

The IMF is seeking to remove its age limit…

Kristalina Georgieva, who is currently the World Bank chief executive and a Bulgarian national, was nominated on 2 August by European governments for the position of IMF managing director (MD). However, as pointed out in a previous IMFBoss blog, Georgieva is 65 years old, meaning that the IMF would need to change its MD age limit rules for the board to officially appoint her as the new head of the Fund.

It was already reported in the Financial Times on 26 July that France had floated the idea of changing the age limit, but that the idea did not attract support from the board at the time. The article added that, “Nonetheless, people familiar with the matter said the age limit could still be tweaked at a later stage if Ms Georgieva emerged as the board’s choice.”

While officially, governments can still nominate candidates until 6 September, after which an “open, merit-based, and transparent selection process” should take place to suss out the very best candidate, upon Kristalina’s European nomination it seems the IMF executive board is already paving the way for her to assume the leadership position.

Continue reading “The IMF is seeking to remove its age limit…”

The UK is pushing George Osborne to head the IMF. How did this come about? And will he be successful?

The UK has indicated that it will back former Chancellor of the Exchequer George Osborne as the next managing director of the International Monetary Fund (IMF). What were the political dynamics between key figures in the run up to this decision? And what is the likelihood of George Osborne becoming to next IMF managing director? Below are some developments that may be considered noteworthy:  

  • In December 2015, when Osborne was Chancellor, the UK became the first G7 country outside Asia to ratify the articles of agreement of the Asian Infrastructure Investment Bank (AIIB).
  • On 5 February 2016, Osborne’s former chief secretary to the Treasury Danny Alexander was confirmed as a senior executive at the AIIB after losing his seat in the 2015 general election, making him, as described in the Financial Times, “the leading British figure at the body.”
  • On 14 July 2016, Osborne was sacked as Chancellor by Theresa May, who was appointed as Prime Minister on 13 July 2016 following David Cameron’s resignation after the European Union referendum.
  • On 17 March 2017, prior to his resignation as MP later in 2017, Osborne was appointed as the editor of the Evening Standard in what the Financial Times described as “an abrupt career shift by the former UK chancellor that has startled both Fleet Street and Westminster.” He was estimated to earn over £200,000 on top of his MP salary for the editor post despite having never worked as a full-time journalist before.
Continue reading “The UK is pushing George Osborne to head the IMF. How did this come about? And will he be successful?”

The IMF and inclusive growth: achieving SDG8

Under the leadership of Christine Lagarde, the IMF endorsed the Sustainable Development Goals (SDGs) and portrayed itself as a champion of inclusive growth. However, little changed in IMF loan agreements, which continued to push the same harmful austerity and deregulation measures of the past. The next leader of the IMF needs to change the core operations of the institution to promote sustainable economic growth, full employment and decent work.

The IMF has not meaningfully supported the SDGs, and its policies undermine the ability of countries to achieve the 2030 Agenda. To illustrate this point, let’s take a look at SDG 8: “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work.”

In a recent report, the International Labour Organization (ILO) shows that the world is not on track to achieve SDG 8 by 2030. For that to change, a major shift in macroeconomic policies is needed.

Orthodox economic policy models, like those promoted by the IMF, focus on supply-side measures and assume that growth will eventually trickle-down. Reality has shown that this is not the case. Furthermore, these models have failed to bring sustained growth the developing world.

Under the guise of “efficiency” the IMF has worked at odds with a decent work growth agenda,  often undermined labour market institutions, pushing for cuts in public wage bills, deregulation and weakening of workers’ rights. This approach, along with sharp spending cuts, lead to a downwards spiral in which the economy shrinks, unemployment grows, poverty soars, and aggregate demand in the economy collapses. The IMF itself admitted that most loan programmes fail to meet  growth targets.

Continue reading “The IMF and inclusive growth: achieving SDG8”