New IMF Head Warns About Global Economy Slump
IMF: Kristalina Georgieva, the incoming head of IMF said the global economy needs to be ready to cope with a fresh economic downturn.
Georgieva vows to ensure IMF fulfills its mandate to help ensure a stable global economy and financial system through international cooperation. Plus, look at other factors such as the limited availability of monetary policy tools.
She added that she had a “huge responsibility” taking on the role at a time of faltering economic growth, growing trade tensions, and historically high debt levels.
In a statement, the new IMF boss said IMF was a unique institution with a rich history and a world-class staff. And that its primary objective included dealing with issues like inequality, climate risks, and rapid technological change.
In her view, the Fund had a more critical role to play in the current state of the global economy.
The IMF annual meeting
Finance ministers and central banks governors will be attending the through.
Their primary need is to head off the threat of global recession, ease China-US trade tensions, and minimize no-deal Brexit. Also, address the tension in the Middle East, causing a risk to oil supplies.
They are also likely to quiz IMF’s decision by its predecessor to grant $56bn loan to Argentina. Argentine is now hovering on the brink of debt default. The predecessor is Christine Lagarde who’s soon to become the head of European Central Bank.
New IMF boss selected amid criticism
IMF, which lends to counties in distress. Its sister organization – the World Bank seeks to alleviate poverty. The two have faced criticism for being Europe’s sphere of influence for the top jobs.
Nadia Daar – Head of Oxfam’s Washington DC congratulated Kristalina Georgieva. He trusts that she will be a strong voice in fighting inequality and advocate for climate action. Nadia said such issues impacted heavily on growth, poverty, and stability. They required strong political leadership from the IMF now, more than ever.
However, he raised concerns over the lack of a non-European candidate. He said it was important to improve the selection process for IMF managing director. Even though the IMF’s board calls it ‘open, merit-based, and transparent,’ it was too politicized for a non-European candidate to succeed.
He added that the status quo undermined the legitimacy of multilateralism at a time when we should be demonstrating its strength.
Despite the growing criticisms from developing countries, the tradition has never been broken. Developing countries account for a much bigger share of the global economy than they did at the end of the 2nd World War.
Europe did not object Trump’s nomination of David Malpass to run the World Bank earlier this year. United States returned the favor by giving Europe a free run at the IMF.
Now, America selects the head of the World Bank while Europe picks the person to lead the IMF. The moves are based on the tacit agreement that stretches back to the creation of the two organizations at the Bretton Woods conference in 1944.
Bulgarian economist – Kristalina Georgieva’s bid to replace France’s Christine Lagarde was unopposed despite the criticism.
She was previously number two at the World Bank.
Georgieva begins her five-year term next week – time for the IMF’s annual meeting later in the month.
