Bulgaria’s Kristalina Georgieva has said the global economy needs to be ready to cope with a fresh economic downturn after being chosen to head the International Monetary Fund (IMF).
The economist said she was taking charge of the Washington-based organisation at a time when growth was slowing, trade tensions growing and with debt at record levels.
Despite criticism of the way in which the top jobs at the IMF, which lends to countries in distress, and its sister organisation, the World Bank, which seeks to alleviate poverty, remain the fiefdoms of Europe and the US, Georgieva was unopposed in her bid to replace France’s Christine Lagarde in the post.
In a statement, Georgieva said: “The IMF is a unique institution with a great history and a world-class staff. I come as a firm believer in its mandate to help ensure the stability of the global economic and financial system through international cooperation. Indeed, in my view, the Fund’s role has never been more important.”
Georgieva added that she had a “huge responsibility” taking on the job at a time of faltering economic growth, trade tensions and historically high debt levels. She said the IMF’s long term objectives included “dealing with issues like inequalities, climate risks and rapid technological change.”
Georgieva, previously number two at the World Bank, begins her five-year term next week, in time for the IMF’s annual meeting later in the month.
The gathering of finance ministers and central bank governors will be dominated by the need to head off the threat of a global recession, ease the trade tensions between China and the US, snd minimise the risks of a no-deal Brexit and the threat to oil supplies from tension in the Middle East.
The IMF is also likely to quizzed over the decision by her predecessor, who is soon to become the head of the European Central bank, to grant a record $56bn loan to Argentina, which is teetering on the brink of debt default.
Under a tacit agreement that stretches back to the creation of the two organisations at the Bretton Woods conference in 1944, America has chosen the head of the World Bank while Europe picks the person to lead the IMF.
Despite growing criticism from developing countries, which account for a much bigger share of the global economy than they did at the end of the second world war, the tradition has never been broken. Europe raised no objections when Donald Trump nominated David Malpass to run the World Bank earlier this year and the US returned the favour by giving Europe a free run at the IMF.
Nadia Daar, the head of Oxfam’s Washington DC office said: “We congratulate Kristalina Georgieva and trust she will be a strong voice in the fight against inequality and an advocate for climate action and gender equality. These issues, which impact heavily on growth, stability and poverty, require strong political leadership from the IMF now, more than ever.”
However, raising concerns over the lack of a non-European candidate, Daar added: “We can’t overstate the importance of improving the selection process for IMF managing director. The IMF’s board calls it ‘open, merit-based and transparent’, but it is too politicised for a non-European candidate to be nominated or succeed.
“The status quo undermines the legitimacy of multilateralism at a time when we should be demonstrating its strength.”