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Europeans Going Round in Circles on IMF Job as Irritation Grows

EU Finance Ministers to Discuss IMF Job Amid Lack of Consensus

(Bloomberg) --

European finance ministers will hold a call on Thursday to discuss who should take over the top job at the International Monetary Fund. The discord over who they’ll put forward could threaten the continent’s claim to the post.

EU governments have so far failed to rally behind a single candidate to replace Christine Lagarde atop the Washington-based IMF and the frustration is palpable across capitals.

A first round of talks led by French Finance Minister Bruno Le Maire, who is coordinating the search, tested the support for five candidates: Spanish Economy Minister Nadia Calvino, Portuguese Finance Minister Mario Centeno, former Dutch Finance Minister Jeroen Dijsselbloem, World Bank Chief Executive Kristalina Georgieva and Bank of Finland Governor Olli Rehn.

Even though some candidates have started gathering support, there isn’t yet full consensus around one name, said a French official, who asked not to be identified because the process is private. The lack of progress could open up the door to a dark-horse candidate that isn’t part of the current short list, according to another European official.

Frustration Grows

Despite the fact that there are five names in the running, Calvino and Centeno are long shots as they are seen as not having the same level of expertise as the other candidates, the European official said.

The fund said in a statement last week that its application process will close Sept. 6. The board intends to complete the process by Oct. 4.

The top vacancy comes after Lagarde resigned this month to lead the European Central Bank. The IMF’s next leader will confront a world economy at its weakest since the aftermath of the financial crisis. Last week, the fund further reduced its global growth outlook, already the lowest since 2009, to a projected 3.2% expansion this year.

Yet Europe has struggled to rally behind a single candidate, with geographic and political considerations deepening the divisions between camps pushing for different hopefuls. Growing frustration over the decision-making process -- especially from countries whose nationals are being considered -- has weighed on the talks, putting at risk the EU’s capacity to come up with a single proposed candidate.

Under a half-century-old agreement, the head of the IMF is a European while the U.S. picks the World Bank chief. That tradition prevailed when David Malpass was selected as the World Bank’s president in April. But Europeans are uncertain whether President Donald Trump’s administration will return the favor -- and emerging markets have been arguing for years that the current arrangement doesn’t reflect a world that’s since evolved.

To contact the reporter on this story: Viktoria Dendrinou in Brussels at vdendrinou@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Richard Bravo, Zoe Schneeweiss

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