The International Monetary Fund (IMF) is an organization that represents 189 countries and manages over US$650 billion (yes with a "b"). Its role, based on Global Affairs Canada, is to support member states in their quest for economic prosperity -- by "working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world."
That's great. In various countries, the IMF has had a major economic role to play by lending substantial amounts of money, but also by imposing drastic conditions on the recipient country. The major changes in Greece to taxation, pension systems, health care and other key social programs are a good example of the IMF's impact.
To continue successfully in its role, the IMF must maintain credibility. And it won't if it doesn't take swift action and ask its managing director, Christine Lagarde, to resign.
Ms. Lagarde is a former French minister of finance who held various cabinet posts and, prior to her political career, was previously an antitrust and labour lawyer. She received various distinctions and was named as the "best Finance Minister" in the Eurozone by the Financial Times in 2009 and the fifth most powerful woman in the world by Forbes magazine in 2014.
She was appointed to the IMF in 2011 and reappointed to another five-year term in 2016.
She is also paid over US$450,000 per year (tax free, of course) that is supplemented by tax-free allocations and expenses (of over US$100,000).
She will now be facing a trial in France for "negligence" after allowing a compensation payment of close to US$600 million to a French politician and businessman. That payment was described by investigating judges as a "sham."
This is not the first time a former French politician has gotten into trouble while heading the IMF. Who can forget her predecessor, the infamous Dominique Strauss-Kahn and his sex parties? That even made the current French president's affairs pale in comparison. President Hollande, now at 13 per cent in the polls, was memorably caught on a scooter leaving the French president's palace to visit his mistress.
The IMF is not a joke. Its decisions affect people's lives. At the darkest of times, its economic impact resulted in people committing suicide, declaring bankruptcies and hundreds of thousands of jobs were lost. Yet, some countries have also profoundly changed their systems (and we're still waiting, and hoping, to see if it is for the better).
Europeans argue that the IMF helm is usually reserved for a European. They brought forward Ms. Lagarde and reappointed her despite the clouds over her.
Canada ranks eighth in terms of our contribution to the IMF. We're not a major player but we're still respected. And our prime minister has quickly built an international reputation. He is seen as part of the "next generation" of leaders.
The prime minister and his international trade minister can and should request that changes be made at the IMF and that Ms. Lagarde, despite the fact that she has not been convicted, be asked to step aside and someone else be appointed.
You can't expect countries to bow to Ms. Lagarde's demands while she's been accused, by investigating judges, of negligence on a payment of that size (or any size for that matter) to a friend of her government.
Canadians would not accept that a politician, being tried for something like this, remain in power while the trial was going on.
If France and European governments can't put forward serious candidates to run the IMF, we can and we should.
The opinions expressed in this article are the author's own and do not represent the views and opinions of Flagship Solutions and its clients.
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