Lagarde to be a different type of boss at the IMF

Christine Lagarde says her leadership style will be more collaborative than her notorious predecessor. It may need to be...

by James Taylor
Last Updated: 27 Aug 2014

They may share the same nationality, but there appears to be little love lost between new International Monetary Fund boss Christine Lagarde and previous boss Dominique Strauss-Kahn. In her first press conference, Lagarde took the opportunity to put the boot into her beleaguered predecessor, with some implicit criticism of his management style: she was 'more inclusive [and] more team-minded', and would push for more diversity at the IMF's top table, she said. And a good thing too: given her bulging in-tray, particularly the pressing problems in Greece and Portugal, she'll need all the help she can get...

One reason Lagarde is presumably so keen to push a diversity agenda is that this was one of the main objections to her appointment. Once it was clear that DSK couldn't continue in his role (although it looks increasingly like some of the allegations won’t stand up to scrutiny), there was much talk about looking further afield for his replacement. Instead, the IMF has gone for another European politician - and another French politician at that. OK, so Lagarde is the first woman and the first non-economist to run the organisation; but she doesn't exactly represent a radical choice.

However, she says that although she's going to continue with some of the reforms instituted by Strauss-Kahn, she's going to do things a little differently. She suggested yesterday that the IMF had become too identikit; that the organisation's employment, recruitment and training policies need to change so that 'people are not clones of each other'. One immediate (and eminently sensible) consequence of this is apparently likely to be the appointment of Min Zhu, a former official at the Bank of China, to a new post of deputy managing director.

All of which is an admission that the IMF needs to change if it's going to have any hope of dealing with the myriad challenges it's currently facing. Top of the agenda is the trouble in Greece; Lagarde will apparently chair a meeting tomorrow to discuss solutions to the country's debt crisis - and she remains insistent that the key is to avoid a default (given the lessons from Lehman Bros). But as she accepts, the issue is broader than Greece; the decision by Moody's to downgrade Portugal's debt to junk status this week has rocked investor confidence around the eurozone, arguably making her task even harder.

To further complicate matters, the European Central Bank is likely to raise interest rates to 1.5% today, as it bids to get inflation (currently at 2.7%) back to its 2% target - seemingly without regard to what's going on with the debt crisis. One analyst described it to Bloomberg as the ECB 'focusing on the day job'. But it's quite a contrast to the approach currently favoured by the Bank of England; inflation here is running well above eurozone levels, but Mervyn King and co have just voted to hold rates at the record low of 0.5% for the 28th consecutive month, because they're worried about choking our (already feeble) recovery. Only time will tell which approach is the more sensible...

- Image credit: Flickr/Adam Tinworth

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