French finance minister Christine Lagarde’s bid for the top job at the IMF was all but sealed on Friday as would-be contender Trevor Manuel ducked out of the contest at the eleventh hour amid a surge in developing country support for the French candidate.
As the Friday night deadline for nominations approached, Lagarde told Emerging Markets at a meeting of the African Development Bank in Lisbon that she was "very confident" of emerging victorious on June 30 in her quest to be the next head of the Fund.
Her chances soared on Friday after the former South African finance minister ruled himself out as it became clear that backing for his possible bid had drained away from developing countries, including in Africa.
Manuel’s decision is understood to have gone down to the wire as he weighed his odds, but a last minute groundswell of support for Lagarde from his own constituency put the final nail in the coffin.
The South African announced his decision not to run at a hastily-arranged press conference in Johannesburg, following a report by Emerging Markets citing senior government sources who as late as Thursday night believed he would throw his hat into the ring the following day.
But in Lisbon today, over a dozen African policy chiefs expressed wholehearted support for the French minister, putting paid to any lingering doubts over the extent of her backing by poor countries.
Matata Ponyo Mapon, finance minister of the Democratic Republic of Congo, and chairman of the African caucus at the IMF, said there was "massive support" for Lagarde. Charles Koffi Diby, Côte d’Ivoire’s finance minister, said low income countries also trusted her to take their interests into account, while AfDB president Donald Kaberuka told Emerging Markets Lagarde would be "terrific."
Asked if she would consider having an African deputy at the IMF, Lagarde said: "I am looking at number one at the moment, I am not looking at number two."
She spoke in the Portuguese capital shortly before flying on to Saudi Arabia and Egypt this weekend to drum up Arab support for her bid. Her whirlwind campaign tour has already taken her to Brazil, India and China.
As Emerging Markets reported Thursday, Brazil has also thrown its weight behind Lagarde’s bid and several Asian officials have already spoken out in her favour. Support for Mexican central bank governor Agustin Carstens, the only other contender, has so far been subdued.
Lagarde also defended herself from suggestions that her nationality could prove an obstacle as IMF head in helping resolve Europe’s mounting economic crisis.
Experts have argued that an impartial outsider would be better placed to break the current deadlock over the eurozone crisis, one of the most profound challenges facing the Washington lender. Responding to a question from Emerging Markets, Lagarde acknowledged this view was valid, but said the opposite was equally legitimate.
"I think [these views] have equal weight. As a result, I think it cancels out the argument." she said. "You can argue that someone with an intimate knowledge would be the most appropriate person to deal with these sorts of issues. Or you could argue that someone who is totally outside, who has not been connected in any shape or form to the European intricacies and subtleties may actually a better person. You can argue both sides of the case."
But Lagarde had previously stressed she wished to be judged on merit, not nationality. "I am not the candidate for Europe. I am a candidate to serve the 187 members of the IMF," she said.
In Lisbon, she pledged to pursue reforms initiated by former IMF chief Dominique Strauss Kahn, including an overhaul of the institution’s governance and lending practices. "I am approving the new direction taken by the IMF in terms of governance to improve the representativeness, which is clearly a matter concern for emerging market economies," she said. If elected she would also focus on "the flexibility of the instruments [the IMF] has been using in line with needs of those economies, with simpler and more focused conditionality."
But Lagarde’s bid faces some final hurdles, reflecting concerns in the developing world that governance reform is only so in name. "I would be inclined to go for someone from the third world candidate," said Gouda Abdel Khalek, Egyptian minister of solidarity.
Lagarde hinted at further reforms and a flexible approach. "International institutions, especially the IMF, must adapt to the reality on the ground, and be ready to change or soften some rigour and demands in order to ease the demand of fiscal consolidation and [also take into account] economic development in a wider sense," she said.
Addressing African ministers, she said. "There will be no magic stick or bitter pill. It is not a matter of one size fits all."