Georgieva Tapped as EU Candidate to Lead IMF After Bitter Vote

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02 aug. 2019, 21.13

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Kristalina Georgieva, the World Bank‘s chief executive, was selected by European governments as their candidate to head the International Monetary Fund following an acrimonious process in which the result was initially contested by some member states.

If Georgieva wins the backing of the IMF board in the autumn, she will succeed Christine Lagarde and confront a world economy at its weakest since the aftermath of the financial crisis and threatened by escalating trade tensions.

“Georgieva has all the skills needed as well as the experience and international credibility to succeed Christine Lagarde and to lead the IMF successfully,” according to a statement released by the French finance ministry following the decision.

Friday’s voting came after European Union governments struggled to rally behind a single candidate during weeks of talks. But efforts to reach a consensus through multiple ballots still ended in disagreement over the voting rules with Germany and the Netherlands among those tabling objections.

The fund will stop accepting applications on Sept. 6 and is seeking to complete the process by Oct. 4. Lagarde is set to become the president of the European Central Bank on Nov. 1.

The European search for her replacement, led by French Finance Minister Bruno Le Maire, tested the support for five candidates: Georgieva, Spanish Economy Minister Nadia Calvino, Portuguese Finance Minister Mario Centeno, former Dutch Finance Minister Jeroen Dijsselbloem and Bank of Finland Governor Olli Rehn.

Georgieva and Dijsselbloem made it to the final round. While Georgieva fell short of the required majority under the voting rules, Dijsselbloem conceded defeat on Twitter.

The U.K. objected to the way the vote was held, saying they didn’t have enough time to field a candidate, according to officials familiar with the matter. The U.K. said they would abstain from process and may still field their own candidate at a later date.

Global Headwinds

An unwritten transatlantic agreement typically allows Europe to select the managing director of the IMF and the U.S. to choose the president of the World Bank. Earlier this year, President Trump successfully pushed for U.S. Treasury official David Malpass to run the World Bank.

Discord in Europe over the process could still encourage emerging markets to nominate their own candidate and argue they have a claim on the job given their growing weight in the world economy.

If Georgieva ends up replacing Lagarde she will have to decide how much to embrace the effort to reshape the institution from one renowned for pushing troubled countries to embrace tight budgets.

Lagarde tried to give emerging economies such as China more of a voice in the lender’s management, while putting greater emphasis on issues including climate change and income and gender inequality.

The new managing director will also be tasked with coordinating relations with Argentina after the IMF last year gave it the biggest ever bailout. Also in the in-tray will be a request for governments to provide more capital, a push the U.S. has so far resisted.

Age Limit

Further complications could still arise. Georgieva, 65, will be above the age limit when her term would start, meaning the IMF would need to change its bylaws if she were to take over. Some officials have voiced concerns that this could raise eyebrows among non-European members of the fund, which would be keen to put forward their own qualified candidates.

According to one official involved in the selection process, the U.S. has indicated it would be willing to support changing the rules on age.

The Bulgarian economist would be the second woman to lead the IMF. Her nomination follows a string of near misses -- most recently for head of the European Commission but also in 2016 for United Nations secretary general.

For the EU’s ex-communist wing, the appointment would be the most prestigious job since Donald Tusk took charge of the European Council.

Hailing from a village in the EU’s poorest member-state, Georgieva was the first member of her family to receive a PhD. She rose to hold jobs in Brussels from 2010, serving as commissioner for international cooperation and vice president overseeing the bloc’s budget.

Better known in Brussels and in Washington than her home country, she’s a proponent of gender equality and fighting climate change. Alongside her international-development work, she’s written a textbook on microeconomics.

--With assistance from Boris Groendahl, Gregory Viscusi, Joost Akkermans, Milda Seputyte and Andrew Langley.

To contact the reporters on this story: Viktoria Dendrinou in Brussels at vdendrinou@bloomberg.net;William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Richard Bravo, Zoe Schneeweiss

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