IMF race thrown wide open as Manuel enters the fray

South Africa set to nominate former finance chief Trevor Manuel for IMF top job, turning race on its head as nominations deadline reached ● Brazil set to back Lagarde ● Lipsky might stay on

  • By Thierry Ogier, Taimur Ahmad
  • 09 Jun 2011
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South Africa will on Friday formally nominate its former finance minister Trevor Manuel for the role of IMF managing director, Emerging Markets can reveal, turning the race on its head as the deadline for nominations draws to a close.

The move ends weeks of speculation over his intentions and radically shakes up a contest that seemed all but set to be clinched by French finance minister Christine Lagarde.

A senior and well placed source in Pretoria on Thursday confirmed to Emerging Markets that Manuel, whose name has been in contention since the shock resignation last month of former managing director Dominique Strauss Kahn, has won the backing of president Jacob Zuma.

The African Union on Thursday called for a non-European, and preferably an African, candidate to head the Washington institution.

“I think it wouldn’t be difficult to deduce from that statement who they are talking about, because there’s only one candidate that has been spoken about,” the source said.

“There’s only one candidate being spoken about at the moment who is from the continent.”

Manuel is the only African candidate to have been named so far. Another senior government source added: “It is between the minister and his boss. It is an employer/employee kind of thing.”

The announcement is expected to be made on Friday as Lagarde arrives in Lisbon in a bid to canvass African support for her candidacy at the African Development Bank’s annual meeting.

The news is likely to send shockwaves through official circles which had seen Lagarde’s victory in the race - which ends on 30 June - until now as effectively a done deal.

In response to a question from Emerging Markets, Brazil’s finance minister Guido Mantega last week revealed that Zuma had called Brazilian president Dilma Rousseff to support Manuel’s bid for the IMF.

But it emerged on Thursday that Brazil would likely plump for Lagarde, despite intensive lobbying by South Africa and Mexico, which is fielding Agustin Carstens, its central banker, for the role although he has so far met with lukewarm support.

The news shatters hopes that the powerful BRIC grouping would unite behind an emerging markets candidate.

A senior Brazilian official close to the discussions told Emerging Markets that Brasilia was now firmly behind the French candidate. “Even if Trevor Manuel is a candidate, Brazil would still prefer Madame Lagarde,” the source said, adding that she was seen as more committed to reform of the international financial system. Manuel and Carstens are considered “far too orthodox” for Brazil, he added.

It also emerged on Thursday that the Fund’s acting managing director John Lipsky is likely to stay on “indefinitely” in his former role as first deputy managing director, a senior IMF official close to Lipsky told Emerging Markets.

Before Strauss-Kahn’s abrupt departure, Lipsky had announced that he would retire in August.

Such a move would complicate even further the already intricate horse-trading over the top slots at the IMF. One widely discussed comprise has been for an emerging market candidate to take the number two job, which has traditionally been held by an American. An about-face by Lipsky, a US citizen, would scupper such a prospect.

Meanwhile in Lisbon African policy officials remained sharply divided on their support. Tunisia’s finance minister Jalloul Ayed told Emerging Markets:

“We are in favour of Christine Lagarde. For Tunisia she’ll be a great advocate of this amazing development in the Arab world.”

Uganda’s deputy finance minister on Thursday acknowledged that he was aware of Manuel’s bid but said Kampala had yet to decide. “I personally would love to see an African candidate but I will support the decision of the Ugandan government.”

AfDB president Donald Kaberuka told Emerging Markets: “I’m sure you’ll appreciate that an African candidate would be saluted by every African,” though he stressed he had no say in the matter.

  • By Thierry Ogier, Taimur Ahmad
  • 09 Jun 2011

All International Bonds

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