Köhler quits as head of IMF to stand for German presidency

The head of the International Monetary Fund stunned the global community yesterday, announcing he would step down to run for election as president of Germany.

Horst Köhler, the IMF's managing director, will quit a year before his term expires in June 2005, creating a prestigious vacancy as head of the world's leading financial watchdog. "You will have heard this morning I was nominated for the office of president of the Federal Republic of Germany," Mr Köhler, 61, said in an internal memo to employees at the Washington-based institution. "I am honoured by this nomination and I will accept it."

Germany's opposition parties, who nominated him, control the special assembly that elects the president, meaning he is almost certain to be elected on 23 May. Sources said board members were "surprised" by the announcement but there was already a flurry of internal speculation about possible successors.

Names mentioned included Jean Lemierre of the European Bank for Reconstruction and Development, Andrew Crockett, a former British head of the Bank for International Settlements, and Stanley Fischer, a former number two at the IMF who lost out to Mr Köhler in 2000.

The post had traditionally gone to a European in a cosy transatlantic understanding between Europe and the US over leadership of the IMF and World Bank.

However, the spat four years ago, when the US rejected Europe's first nominee, German deputy finance minister Caio Koch-Weser, and pushed for Mr Fischer, a Rhodesian born US citizen, led to call for reform.

An IMF spokesman said he could not comment on the succession process, saying it would be up to the 184 country members.