Kristalina Georgieva is poised to succeed Christine Lagarde as managing director of the IMF after the board of the Washington-based multilateral lender said on Monday she was the sole contender for the job.
Georgieva, a 66-year old Bulgarian who has served as chief executive of the World Bank since early 2017, will face a raft of challenges if her appointment is confirmed by the IMF's directors. The lack of other nominees means her success in the race is all but guaranteed.
As a champion of multilateralism, Georgieva is expected to maintain Lagarde's recent focus on tackling climate change, boosting female labour participation and reducing inequality.
A longtime World Bank official who served as EU commissioner for aid and crisis response, Georgieva has more expertise in development than Lagarde but less familiarity with financial trouble in advanced economies.
The IMF has said it would like to conclude the selection process by early October at the latest. As Georgieva cruises towards her appointment, here are five big issues she will face.
The future of the Argentine bailout
The IMF's largest bailout in history — a US$57 billion ($88.6b) bet on the economic stewardship of reformist president Mauricio Macri — is on the rocks.
As Georgieva takes office, Macri is expected to be unseated from office in an election by Alberto Fernández, a populist challenger with little sympathy for the IMF or the terms of its loan.
The prospect of Macri's defeat sent the peso tumbling recently, undoing much of the economic progress that had been made and making it more likely that the IMF will have to renegotiate or replace the existing programme.
Although the IMF has defended its approach, critics have questioned both the design and scale of the loan, as well as its inability to garner more widespread support among the Argentine public.
The economic slowdown
The global economy is slowing, which puts more pressure on the IMF as the world's lender of last resort.
According to the Fund's own forecasts, which have been repeatedly downgraded, world output is expected to grow by 3.2 per cent this year, compared with 3.8 per cent in 2017 and 3.6 per cent in 2018. The downward trend increases the risk that more countries will have to seek support from the IMF.
The trade war between Washington and Beijing has not only cast a cloud over the world economy, but also made multilateral institutions like the IMF battlegrounds in the conflict.
Lagarde had solid relationships with both Trump and the Chinese leadership, and Georgieva has the same.
But the IMF nonetheless risks being caught in the middle if either the US or China object to its research, dispute its basic findings or throw a wrench into a problematic bailout. The Fund's work on currency and debt transparency will also be closely followed.
Finding the money
Georgieva will have to put the final touches to a deal negotiated by Lagarde to renew the Fund's borrowing arrangement with the US, which would keep IMF resources at about US$1 trillion. But many at the Fund do not believe this is sufficient given the demand it might face in the event of a new recession or financial crisis.
In the next IMF fundraising drive, Georgieva may try to achieve what Lagarde failed to secure: a permanent increase in funding, in exchange for governance changes that would give more power to large emerging market economies — a move that would be controversial with both the EU and the US.
The repeat offenders
In addition to Argentina, Georgieva's focus will be on Ukraine and Pakistan, two other countries that have frequently borrowed from the Fund but never been able to fully stabilise their economies and financial systems.
With a new government in place in Kiev, Ukraine is hoping to seal a deal with the IMF for fresh loans later this year.
After months of negotiations, Pakistan in July secured new loans — despite US concerns that the money might be used to repay Chinese debt — but there are doubts about whether the programme will succeed.
Written by: James Politi
© Financial Times