New IMF chief has work cut out

The new head of the International Monetary Fund will ”have his work cut out” due to the global credit crunch, one of his predecessors said on Saturday.

Dominique Strauss-Kahn, a former French finance minister, was named head of the International Monetary Fund on Friday.

Strauss-Kahn will begin his five-year term on November 1, succeeding Spaniard Rodrigo Rato, who announced in July he would step down after the IMF’s meeting in mid-October.

”His appointment is good news and I send him all my best wishes because he will have his work cut out,” said Michel Camdessus, a fellow Frenchman who ran the Washington-based financial institution from 1987 to 2000.

”He will have crises to deal with and will have to prevent them happening, or, when they do happen, he will have to analyse and give a diagnosis and then get international support behind countries in difficulty,” Camdessus told France Info radio.

Among financial crises on the IMF’s agenda, he cited the squeeze on global credit markets which began with problems in the subprime mortgage lending market in the United States.

Once at the centre of financial crises in Asia and Latin America, the IMF’s role has changed during a decade of relative calm which has seen less need for its emergency loans.

But with increased market volatility caused by the recent global credit crunch, the IMF has sounded warning bells on too much complacency and cautioned that the pace of global economic growth is likely to slow, especially in the United States.

Strauss-Kahn (58) has pledged to reform the institution to make it more representative of its 185 members and to strengthen its monitoring of economies. – Reuters

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