Tuesday, May 31, 2011

Mexican IMF Candidate Calls for Bailout Flexibility

LISBON—Mexico's Agustín Carstens, so far the lone challenger to Europe's renewed claim to head the International Monetary Fund, suggests more flexibility for countries on IMF support programs as he seeks backing in Europe.

The Bank of Mexico governor, the chief rival to France's Christine Lagarde, said the IMF needs someone from an emerging market with experience in handling financial crises.

Mr. Carstens was in Lisbon and Madrid this week as part of a global whistle-stop tour to win support for his candidacy. Without mentioning Greece specifically, Mr. Carstens said that financially-distressed countries shouldn't be punished for failed goals as long as they show commitment.

"When programs are designed in a crisis, there is too much uncertainty, and the fund needs to be flexible in recognizing measures aren't working as well as expected and be flexible with that and finding a new solution," he said.

The IMF currently withholds financial assistance if a recipient country doesn't meet certain commitments on budget reforms and deficit reduction. This week Greece's budget accounting is being measured by the IMF and the European Union to see if it is eligible for its next aid installment. Worries that Athens will miss its targets have kept European financial markets on edge for a month.

Emerging economies in Asia and Africa have supported a break from the tradition of a European holding the top financial post, but Europeans have been quick to back the French finance minister.

Dominique Strauss-Kahn, who resigned earlier this month after being charged in New York with sexual assault, was closely focused on Europe's debt crisis and measures to keep it from spreading. Europeans argue that the next official will have to do the same.



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