The Treasurer today reiterated Australia’s strong support for the G‑20 position that the heads of the international financial institutions should be selected using an open, transparent process with candidates not restricted by nationality.
The Managing Director of the International Monetary Fund (IMF), Mr Rodrigo de Rato, recently announced that he intends to step down as Managing Director in October 2007.
Based on a 60 year old unwritten convention, the major countries of Western Europe have always nominated the IMF Managing Director and the United States has always nominated the World Bank President. All nine IMF Managing Directors have been citizens of Western European countries and all eleven World Bank Presidents have been US citizens.
Over recent years, many members of the IMF and World Bank have drawn attention to the inconsistency of this convention with the multilateral character of the Fund and Bank, and with good corporate governance principles.
Responding to these concerns by removing nationality restrictions would enhance the institutions’ legitimacy and effectiveness by giving all member countries, whether advanced or developing, an effective voice in the selection process.
Moving to a more inclusive process will also be important for the credibility of other reforms being developed by the IMF and World Bank aimed at modernising their governance arrangements, strategies and operations.
The Treasurer welcomed the IMF Executive Board’s announcements on 9 and 12 July that there will be an open, transparent process for selecting Mr de Rato’s successor, with candidates being considered regardless of nationality. The Treasurer emphasised that the process will need to genuinely consider the relative merits of all candidates with the aim of selecting the best available person for the position.
This statement is being issued jointly with similar statements from Trevor Manuel, the South African Minister of Finance and 2007 Chairman of the G‑20, and Guido Mantega, the Brazilian Minister of Finance and 2008 Chairman of the G‑20. Similar joint statements were issued in late May in relation to the position of President of the World Bank.