Members of the Executive Board,
Thank you for the opportunity to present my candidacy for the position of Managing Director of the International Monetary Fund and for your time and valuable insights during our prior meetings.
The next MD will take the helm of the Fund at a time when performance of the global economy continues to disappoint, risks from trade tensions have intensified, debt is at historically elevated levels and growth is subdued after a decade-long expansionary cycle. I put myself forward fully aware of the great responsibility your trust would entail should you select me for this position.
Why do I want this job and why should I deserve your vote of confidence?
First, I am a firm believer in the Fund’s mandate to promote monetary cooperation and the stability of the international monetary system, facilitate international trade so as to support sustainable economic growth and employment, and help reduce poverty. It has an essential role to advance sound macroeconomic policies. I know from personal experience the high costs of bad policies on economies and on people. My country went through a painful adjustment in the 90s, when it turned to the IMF to restore macroeconomic stability as a foundation for growth, employment and improvements in living standards.
Since then and throughout my career I have been committed to the promotion of rigorous economic policies. At the European Commission I took an active role in building a more resilient financial system and led important budget reforms. As the World Bank’s CEO I worked in partnership with the Fund on country reform programs, spearheaded our joint work on debt transparency and sustainability and promoted a strong focus on domestic resource mobilization.
Second, I come to this Board Meeting with a strong track record in effective and efficient management of complex international organizations. At both the European Commission and the World Bank I led reforms to strengthen efficiency and focus on results with attention to the performance and well-being of staff.
Third, having worked in both advanced, as well as in emerging and developing countries, I am well attuned to different priorities and perspectives. Many colleagues tell me that I am a “bridge-builder” – and I embrace that reputation. In an increasingly complex world, reaching consensus carries a higher premium and requires more effort and attention. I am committed to building consensus on the issues important to the IMF’s shareholders.
What do I see as key priorities for the Fund?
My most immediate priority, if elected, is defined by the conditions in the global economy and the challenges that it faces. Multiple factors – unpredictability of trade disputes, capital flow volatility, Brexit, conflicts and natural disasters able to cause supply-side shocks and massive economic disruptions – contribute to a heightened state of uncertainty. In this environment, the IMF’s top priority is to minimize the risk of crisis and to be ready to cope with downturns.
And the Fund should stand ready to provide financial support for countries in need. In a deteriorating economy it will be harder for everyone, but even more so for countries already facing difficulties – including some of the Fund’s program countries. The Fund needs to be sure that programs remain relevant and that they reflect the full spectrum of changing circumstances. It should continue to engage evenhandedly with all countries experiencing more difficulties while giving ever closer attention to fragile and conflict-affected economies.
On many counts the world and the IMF are better equipped to face these challenges. In comparison with 2007, when we did not see the crisis coming, today we can rely on early warning systems – including the Early Warning Exercise that the IMF and the Financial Stability Board (FSB) perform. The Fund’s integrated bilateral and multilateral surveillance provides the basis for more effective and policy-relevant observations of risks and opportunities in a highly integrated world economy. In terms of lending, the Fund now has on offer precautionary instruments for countries with good policies, facing elevated risks. Most importantly, the Fund’s unique role at the center of the global financial safety net has been strengthened in recent years, with more resources for it to call upon. Regional financial safety nets and bilateral swap arrangements are now in place, some with significant response capacity. Central Bank reserves are up to US$11 trillion – more than five times greater than before the 2007 crisis. And macro-prudential policies can now help to mitigate financial stability risks.
At the same time, it is harder than it was a decade ago to mobilize a swift collective response to the threats the world faces today. With warning signals now flashing, our preparedness could soon be tested. This is happening against a backdrop of rapid change, with more anxiety about the impact of technological transformation and globalization, and low productivity and wage growth creating more uncertainty for people. Challenges to multilateralism increase the Fund’s relevance and role in a global response.
The Fund has its objective assessment of risks and policy responses to offer. Christine Lagarde always spoke plainly and clearly on issues such as trade, debt, appropriate fiscal policies and structural reforms. I pledge to do the same. Like her, if you select me, I will urge the Fund’s staff to turn evidence-based analysis into actionable recommendations to policy makers.
Today the tools of monetary policy are less available after a long cycle of low interest rates and quantitative easing. Historically high debt-to-GDP ratios coupled with shrinking fiscal space in many countries further limit the scope of expansionary policies. Issues such as subdued productivity, the changing nature of work, the climate crisis, inequalities and governance need our attention if the world is to get on a sounder growth footing.
The skies are darker – raindrops are falling. We can no longer delay fixing the roof. I will challenge the team to work with partners on how to deploy the use of fiscal policies and structural reforms and how to seek solutions not only within but also beyond conventional wisdom.
My second priority is safeguarding the Fund’s financial strength and supporting the shareholders in pursuing governance reform. The Fund’s effectiveness depends upon having sufficient resources to provide full confidence that it can adequately support its membership. It is vital that with the completion of the 15th General Review of Quotas progress is made to ensure the Fund’s lending capacity, while recognizing there is still work to be done on quotas and governance reforms.
The legitimacy of the Fund stems from its global membership and its ability to evolve. In this regard member countries expect that the Fund deals with all relevant issues of governance, voice and participation. Throughout my mandate I will support the membership in addressing these issues.
And while many aspects of voice and participation are inherently shareholders’ issues, there is one – the diversity of the staff – where management is in the driver’s seat. In all organizations I have had the privilege to lead I have seen the benefits of nurturing a culture of diversity. Every institution is more effective when it reflects the world around us. I pledge meaningful and measurable advancements in all aspects of diversity, with a particular focus on increasing the numbers and seniority of women and nationals from under-represented regions.
My third priority is ensuring the Fund continues to evolve to respond to present and future challenges. With regard to the Fund’s unique surveillance function, the ongoing comprehensive surveillance review provides for further enhancements, so it better meets the requirements of the Fund’s members. In our meetings some of you brought up the importance of longer-term trends such as demographic shifts, use of digital technology, the spread of artificial intelligence and the impacts of climate change and how they might interact with macroeconomic and financial conditions. The Fund’s enhanced policy advice can help build more resilient and adaptable economies.
In terms of lending and capacity development, the Fund constantly strives to integrate lessons from experience. Recent Independent Evaluation Office (IEO) reports on Fund’s advice on unconventional monetary policies and its work with fragile states offer valuable observations and recommendations for further improvements. I will always be searching for opportunities to make the Fund more impactful.
Based on my interactions with you and your authorities, I want to reflect on three issues related to enhancing the Fund’s work. First, in a more uncertain environment it would be important to ascertain whether precautionary instruments are appropriately designed and deployable for a wide enough range of countries. In my view we should explore if and under what conditions the Fund could step up this type of financial support.
Second, more of the Fund’s programs are in low-income countries, some of which are stable and growing fast while others are facing longer-term fragility. The Fund needs to develop ever more differentiated approaches to both lending and capacity-building in these countries, according to their specific needs and circumstances.
Third, as indicated in the IEO’s draft issues paper on Adjustment and Growth in IMF-Supported Programs, there are important lessons from past experience for achieving the right balance between orderly adjustments and inclusive growth.
Making the case for multilateralism to a more skeptical world requires delivering real improvements in the lives of people. This is best done by multilateral institutions working together. I heard a lot of encouragement in my interactions with you to keep the Fund’s work close to its core mandate and seek partnerships with other organizations. Coming from the World Bank, I see significant opportunities to build on each other’s strengths. We have a great tradition – with examples such as the Heavily Indebted Poor Country Initiative, the Financial Sector Assessment Program, our joint work on Debt Sustainability Framework for Low Income Countries and the Bali Fintech Agenda. This collaboration can be extended to macro-critical issues such as climate, gender, fragility, governance and anti-corruption. Similarly, the Fund can build on the work of others, for example with the Bank for International Settlements on digital currencies and with the OECD – on international taxation. Working with FSB and various regional financial arrangements is also necessary.
To do my work, I will rely every day on the Fund’s many strengths. The greatest of them is its staff – highly skilled and highly respected, deeply committed to the Fund’s mission. For their sake and the sake of the people we serve I will strive to modernize the Fund’s operations so that staff can excel in their jobs. I fully embrace the Fund’s ambitious program to update its corporate operations, human resource management processes and systems, data analysis and knowledge management. The institution has never taken its relevance for granted. It cannot afford to stand still. Change is accelerating, and we need the Fund to be agile and adaptable, so it can keep pace.
In conclusion, and with humility, I offer my candidacy for your careful consideration. My pledge to you is that, if you entrust me with leading the Fund for the next five years, I will work with you to strengthen its foundations, to make it ever more forward and outward-looking, consensual and attentive to the needs of its members, attuned to a rapidly changing world, fair and even-handed in its objective and independent advice, a beacon for talent and expertise and with an unshakeable and relentless commitment to delivering effectively and efficiently in the service of the greater public good.