Monday, 30 May 2011
Some thoughts on a new managing director of the IMF
There needs to be a transparent selection process for the next managing director of the IMF. Most commentators agree that transparently agreed technical qualifications must drive the selection criteria. However, the real issue is the far more controversial question of the managing director’s political and policy orientation.
At this time of resurgent austerity politics, it is vital to discuss how to make the IMF an institution that puts poverty eradication, employment, decent work, and the regulation of global financial flows back as its overarching rationale, in tune with its intent as conceived in 1944. The Articles of Agreement state as the purpose: “To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.” (Article I point 2).
In light of this, it is vital to discuss how to change the “operating logic” of the IMF so as to enable governments – in South and North – to re-orient their fiscal budget expenditures towards expenditures on education, health, social assistance and social insurance, and care services, and to ensure that these services and transfers are of high quality and guaranteed for all citizens – and for migrants. It is vital for the IMF to use its commodity price stabilisation mechanisms to enable food price regulation at global, regional or national levels. It is vital to deepen the timid IMF discussions on tax administration and compliance and to move these towards structured tax reforms for progressive taxation, which would enable countries to universalise high quality social services - promised since the 1940s - and to implement innovative ideas such as the global social protection floor. For all this to be possible, it is also vital to re-assess debt sustainability from a qualitative rather than a quantitative approach fixated on artificially-pronounced debt ceilings.
The selection of a new IMF managing director is a good opportunity to advance such policy reorientations: many of the “emerging economies” – such as for example Brazil, Mexico, South Africa, India - have installed progressive socio-economic policies and illustrated how government deficits can be useful and sustainable if the expenditures are oriented to social goods and services, which have made a tangible difference for millions of people in their respective countries. They have also demonstrated how social expenditures, such as on social assistance, food price support, school meals, or employment schemes, can re-kindle post-crisis economic growth. They could share this experience with South and North.
So, an IMF managing director from the South could help with policy advances - provided she is attuned to this new, socially-oriented discourse, and can lead the IMF members in that new direction. A managing director from the North or the East with a human development policy leaning could be equally good, as long as she, or he, is committed to the interests of the global South, and to guide the member states in the direction of progressive policy decisions.
Gabriele Köhler is Development Economist and Visiting Fellow, Institute of Development Studies, Sussex (Contact: email@example.com).