On October 1, 2019, the International Monetary Fund (IMF) made a groundbreaking decision by formally selecting Kristalina Georgieva of Bulgaria as its new leader. Georgieva, only the second woman to ever head the 189-member institution, will serve a five-year term, replacing the outgoing Christine Lagarde who is set to take over the European Central Bank later this year. This article explores the transition in leadership, the functions of the IMF and the role of voting share in determining leadership.
Kristalina Georgieva’s Claim to the IMF Leadership
Kristalina Georgieva’s selection as head of the IMF marks a significant departure from the norm in several ways. She is not only the second woman to lead the institution but also the first individual from an emerging economy to secure this high profile role. The Managing Director of the IMF is tasked with leading its operating staff and chairing the Executive Board, with support from four Deputy Managing Directors. Prior to her appointment as the Chief of the IMF, Georgieva served as the Interim President for the World Bank Group, providing her with valuable experience in global monetary affairs.
David Malpass and the Role of The World Bank
David Malpass, a renowned U.S. Treasury official, was unanimously selected as the new President of the World Bank on April 9, 2019 for a five-year term. His appointment continues the tradition where a European heads the IMF and an American heads the World Bank. However, this practice has resulted in scepticism among rising emerging economies that haven’t been able to achieve substantial IMF voting shares despite adjustments in 2015.
International Monetary Fund: A Brief Overview
The International Monetary Fund, fondly referred to as the Fund, was established during a UN conference in Bretton Woods, New Hampshire, United States, in July 1944. The IMF primarily offers financial assistance to member countries facing balance of payments problems. It also lends money to bolster international reserves, stabilize currencies and similar functions. The Fund’s unit of account is the Special Drawing Rights (SDRs), which is not a currency per se but a basket of currencies including the U.S. dollar, Euro, Japanese yen, pound sterling and the Chinese renminbi. The latter was included in the SDR basket only recently in 2016.
| Fact | Detail |
|---|---|
| IMF founded | July 1944 |
| Kristalina Georgieva’s term begins | October 1, 2019 |
| David Malpass’ term begins | April 9, 2019 |
| IMF members | 189 countries |
| SDR basket of currencies inclusion of Chinese renminbi | 2016 |
The IMF Leadership and Voting Share
The leadership of the IMF has traditionally been European, while the President of the World Bank is typically selected by the United States. However, this situation has led to growing discontent among emerging economies. Despite some changes in 2015, these emerging economies have failed to secure a significant voting share in the IMF. This reality dashes their hopes of ever leading the Fund, perpetuating a Euro-American dominance in global monetary affairs.
