Agustín Carstens, the governor of Mexico’s central bank, has stiffened his fight with rivals to become head of the International Monetary Fund by stressing that the job would be best done by an economist who understood the challenges facing high-growth economies.
In India, ahead of visits to Beijing and Tokyo to press his candidacy, Mr Carstens said it was “very important” to have strong economic credentials to give leadership to the IMF at a time when high commodity prices and volatile capital inflows threatened large, fast growing economies like India, China and Brazil.
His comments represent the first criticism of the suitability of frontrunner Christine Lagarde to run the IMF Mr Carstens said that he offered a “far deeper understanding” than the French finance minister of the difficulties that emerging markets faced. He warned that a European policymaker would have little experience of dealing with the economic threats facing the world’s poorest people.
As the race for the job of managing director of the IMF intensifies, Mr Carstens is emphasising his experience as a central banker, finance minister and a former deputy managing director of the multilateral institution. He is also pressing his suitability as a respected economist, who studied at University of Chicago in the US, to rally support from the developing world.
Ms Lagarde, has an academic background in political science and is admired for her diplomatic skills. She was chairman of Baker & McKenzie, an international law firm, before holding a number of ministerial portfolios in the French government.
Over the weekend, Stanley Fischer, the head of Israel’s central bank and a former commercial banker, also entered the race.
Among the top challenges, Mr Carstens identified, was commodity price fluctuations, particularly for food stocks and gasoline which accounted for a higher proportion of consumer spending in the developing world than the west.
“In Europe, commodities don’t represent such a large challenge. It’s not such a pressing issue. It requires a lot of flexibility. It requires monetary policy adjustments and probably at some point subsidies,” he said in an interview in New Delhi after meetings with the Indian government.
Another big challenge was managing capital inflows to emerging economies, spurred by loose monetary policy in the US and Europe. He said the ability of emerging countries to absorb surplus capital posed “huge problems” and that defensive measures may be necessary to slow capital appreciation in fragile economies.
“That’s not the kind of challenge faced by any advanced economy,” he said.
But the biggest challenge, he said, was understanding better the quality of growth in fast-growing large economies like India and China with large numbers of poor people.
“The main challenge that emerging markets are facing is that they are getting a lot of growth. But is it good quality growth that is being reflected in more employment and alleviating poverty?” he asked.
The Mexican central banker said he would “go all the way” in his bid for the job, which will be decided on June 30. He described his effort to topple European dominance of the IMF as having started at “3-0 down”, and explained the caution of developing countries to back an alternative bid as fear of not being seen to back a bid that failed.