French Finance Minister and IMF candidate Christine Lagarde said on Saturday tackling sovereign debt troubles would be a priority of the International Monetary Fund if she led the Washington-based rescue lender. Lagarde, competing with Mexican central bank chief Agustin Carstens, was in Saudi Arabia as part of a world tour where she needs to drum up support among emerging market economies for her IMF candidacy.
South Africa’s Trevor Manuel ruled himself out of the race for the IMF’s top job on Friday, making Lagarde an even firmer favourite, although she remains under threat of a judicial inquiry in her home country. Lagarde is backed by the European Union and a handful of smaller countries from Georgia to Mauritius. Paris is hopeful that Washington and Beijing will also stand behind her.
Brazil, Latin America’s biggest economy is leaning towards supporting Lagarde but has not yet made up its mind, officials said on Friday. Lagarde said that the IMF should also support countries affected by the pro-democracy protest movement sweeping North Africa and the Middle East.
Riyadh has pledged $4 billion in aid to Egypt and was also instrumental in a $20 billion handout to Bahrain and Oman for job-creating projects.
One potential pitfall for Lagarde is a legal investigation into her role in a 2008 arbitration payout to a French businessman. A top French court on Friday put off until July 8 its decision on whether to open a formal inquiry into allegations by opposition left-wing deputies that she abused her authority in approving a 285 million-euro payout to a businessman friend of President Nicolas Sarkozy.