IMF director steps down, paving way for Trump appointee

David Lipton’s resignation could allow US president to increase influence over financial watchdog

Phil Thornton
Friday 07 February 2020 18:46 GMT
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David Lipton has resigned as the IMF’s first deputy managing director
David Lipton has resigned as the IMF’s first deputy managing director

One of the most senior figures at the International Monetary Fund is stepping down in a move that will allow the Trump administration to influence who will take over as second-in-command at the financial watchdog.

David Lipton, 66, will step down as first deputy managing director after a nine-year tenure that made him the longest-serving official to hold what is effectively the number two position.

When he leaves at the end of this month he will be joined by Carla Grasso, chief administrative officer and one of three deputy managing directors appointed in 2015.

The moves will allow the IMF’s managing director Kristalina Georgieva to stamp her mark on the organisation four months after she took on the top job. It is understood she wants to raise the profile of the departmental directors who are the key people who will implement her policy on the ground.

However, according to precedent, the first deputy managing director of the IMF has traditionally been an American national, offsetting the fact that Europeans have always held the top job of the Washington-based multilateral lender.

Traditionally the White House submits a shortlist of candidates from which the managing director will pick her nomination, who is then approved by the fund’s executive board based on consensus.

The process will revive concerns among NGOs and campaign groups that senior roles at the IMF and its sister organisation, the World Bank, are chosen by politicians rather than through a competitive recruitment process.

Luiz Vieira, coordinator of the Bretton Woods Project (BWP), a network of NGOs, said: “We would say it is ridiculous to have a process by which the choice of all the candidates is restricted to one country. We will definitely be calling for an open, transparent and merit-based approach to the recruitment for a very senior post.”

Ms Georgieva, a Bulgarian, was appointed as managing director in October after no other candidate was put forward by a member state. The post has gone to a European national since the IMF was established in the 1940s.

A year ago, David Malpass, a senior Treasury official, was appointed as president of the World Bank after being nominated by US president Donald Trump.

Last month BWP raised its concerns that, soon after she was appointed, Ms Georgieva had given her support to the reforms instituted by Mr Trump, which include a $1.5 trillion (£1.16tn) tax cut that slashes corporate rates.

Mr Vieira said that contrasted with the more critical stance taken by her predecessor Christine Lagarde, who in 2018 identified Mr Trump’s tax reforms as a hazard that “could destabilise the current economic recovery”.

“Georgieva is still getting her feet under the table but if she is more favourable to a US line then having her and the first deputy MD becoming aligned behind those policies could be interesting,” he said. “Lagarde was able to say some pretty critical things about the US.”

Ms Georgieva lauded Mr Lipton for his “intellectual leadership and innovative insights” and said that he commands “wide respect across the IMF’s 189 member countries” as well as among IMF staff.

She added: “David has provided an invaluable service to the fund’s membership and the global economy more broadly with his outstanding economic experience and expertise.”

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