Imf Crisis

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Posted: Thu, Jul 7 2011. 9:20 PM IST

Managing IMF’s multiple crises
Perhaps the most difficult, challenge facing Lagarde, is the mess in Europe, where IMF has become overly entangled in euro zone politics Raghuram Rajan
Now that the dust has settled over the selection of the International Monetary Fund’s (IMF) managing director, IMF can return to its core business of managing crises. Christine Lagarde, a competent and well-regarded technocrat, will have her hands full with three important challenges. The first, and probably easiest, challenge is to restore IMF’s public image. While the criminal case against Dominique Strauss-Kahn (DSK) on sexual-assault charges now seems highly uncertain, the ensuing press focus on IMF suggests an uncontrolled international bureaucracy with unlimited expense accounts, dominated by men with little sense of restraint. Fortunately, the truth is more prosaic. Top IMF staff face strict limits on their allowable business expenses (no $3,000 per night hotel rooms, despite reports in the press), and are generally underpaid relative to private-sector executives with similar skills and experience. IMF, like many organizations where workers spend long trips together, has its share of intra-office romances. But the environment is professional, and not hostile to women. A previous incident in which Strauss-Kahn was let off lightly for an improper relationship with a subordinate clearly suggests that the fund needs brighter lines for acceptable behaviour and tougher punishment for transgressions. But other organizations have dealt with similar issues; IMF needs to make the necessary changes, and, equally important, get the message out that the DSK incident was an aberration, not the tip of the proverbial iceberg. The second, and perhaps most difficult, challenge facing Lagarde, is the mess in Europe, where IMF has...