Three Are Running for IMF Head

June 12th, 2011
in econ_news

Caption photo:  Stanley Fischer (Reuters)Stanley Fischer 

Econintersect:  Declarations for candidacy as head of the IMF (International MonetaryFund) closed at midnight Friday and Stanley Fischer, governor of the Bank of Israel, announced his candidacy at the very last minute.  This was a surpise move since Mr. Fischer is 67 and the IMF by-laws set the maximum age for the managing director at 65.  For Fischer to be elected the age requirement would have to be set aside by the IMF executive board.

Follow up:

From the Financial Times:

Mr Fischer is likely to start as a long-shot candidate for the title. Ms Lagarde, with the support of the European nations which hold nearly a third of votes on the board, has been campaigning hard for support among emerging market countries and remains the clear favourite.

Mr Fischer, born in what is now Zambia, was an academic economist and became an American citizen before being appointed IMF first deputy managing director in 1994, a position he held until 2001.

Mr Fischer guided the IMF through some of its most active but also controversial rescue lending programmes, including the string of bail-outs during the Asian and Russian financial crisis of 1997-1998. He took Israeli citizenship to become governor of the Bank of Israel in 2005.

Eswar Prasad, a former senior IMF official now at Cornell University, said that while Mr Fischer was respected as a technocrat, it was hard to see where his votes would come from. “He is likely to be seen as essentially an American candidate, which endears him neither to Europe nor to the emerging markets,” Prof Prasad said. “There is little love lost between Fischer and the Asian emerging markets, who view him as the IMF’s battering ram during the Asian financial crisis.”

From Bloomberg:

Fischer helped steer Israel’s economy back to growth after the worst global recession since World War II. The central bank forecasts Israel’s economy will expand 5.2 percent this year.

In August 2009, Fischer became the first central bank governor to reverse course in response to signs of a financial recovery when he raised the benchmark interest rate by a quarter point to 0.75 percent. He was given a second five-year term last year and was named central bank governor of the year for 2010 by Euromoney magazine in October.

Fischer earned his undergraduate and master’s degrees at the London School of Economics. He then won a scholarship from MIT, in Cambridge, Massachusetts, where he studied under future Nobel laureate economists Paul Samuelson and Robert Solow. He later joined the faculty at MIT, serving as the thesis adviser to Ben S. Bernanke, now the Federal Reserve chairman.

From 1988 to 1990, he was chief economist at the Washington-based World Bank. As first deputy managing director of the IMF during the 1990s, Fischer worked to resolve financial crises in Mexico, Russia and Southeast Asia.

The new IMF managing director will succeed Dominique Strauss-Kahn, who resigned last month after he was charged in New York with attempted rape. Strauss-Kahn has pleaded not guilty.

Sources:  Financial Times and Bloomberg

Other candidates are Christine Lagarde, finance minister of France, and Augustin Carstens, Mexican central bank governor.  Although Legarde is considered the favorite, Fischer has more direct IMF experience, being formerly second in command of the organization.  Another factor that Lagarde must overcome is a sentiment around the globe calling for a non-European managing director.

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