SÃO PAULO, Brazil—Mexico's central bank Governor Agustín Carstens acknowledged that the early days of his bid to become the first non-European head of the International Monetary Fund haven't been encouraging, but said he would garner broader support during a multicountry tour that includes Brazil, China, Japan and other nations.
In interview here, where he lobbied senior Brazilian officials for support, Mr. Carstens said Europe's debt crisis is more reason that the IMF's next managing director should come from outside Europe—contradicting the argument often made by supporters of the favorite in the race, French Finance Minister Christine Lagarde.
"I have the advantage of bringing a fresh pair of eyes to the situation, the possibility of supplying fresher, and more frank advice," Mr. Carstens said. "More frank because if you are not from the region you can often speak more freely.
Whoever prevails will inherit an outfit that has pledged €79 billion ($114 billion)—about two-thirds of its total lending commitments—to three euro-area countries that are struggling to repay their obligations and revive their economies without the freedom to devalue their currencies. Many economists think Greece, and perhaps Ireland and Portugal, will have to write down their debts. But Mr Fischer, who has reportedly been considering a bid for the job, said in 2002 that economists are far more willing for a country to default than the country’s policymakers themselves. A number-two at the IMF between 1994 and 2001, he added that “it is the policymakers who will face the political consequences.”
Mr Fischer believes policymakers are “right to go far to avoid default”. But how far is too far? In January 2001 the IMF gave Argentina a big “last chance” loan to help it calm its creditors. It failed. In August 2001 they gave the country a second last chance. It also failed. Mr Fischer believed the August loan had a “non-negligible” chance of success—one worth taking to avoid the catastrophe that followed. But others disagree. Michael Mussa, a former research director at the IMF, says the August loan was “the greatest mistake the fund made in my ten years there.
Until we make credible policy decisions, we cannot break the perverse dynamic of the markets," he said in the interview.
"But if we break this negative dynamic, we can enter into a virtuous cycle and countries can begin to see positive results."
Carstens faces opposition from many European countries that want to continue the long tradition of giving the top IMF post to one of their own.
French Finance Minister Christine Lagarde, who is considered the frontrunner, is backed by many European nations.
There is another potential candidacy from the developing world, however, former South Africa finance minister Trevor Manuel.
Separately Thursday, South African president Jacob Zuma spoke to Brazilian president Dilma Rousseff about Manuel's candidacy, a source within Rousseff's office's told AFP.
Zuma "told the president that South Africa was having informal discussions with the group of Brics (Brazil, Russia, India, China and South Africa) about Manuel as head of the IMF," the source said.
The source said Rousseff responded positively about a candidate from a developing country, but that Brazil would wait until later this month, when all the candidates are expected to be announced, before commenting on any names.
The IMF is due to publish a full list of candidates by June 17. The final selection is expected to be announced by June 30.
The institution's executive board, whose members represent a country or a group of countries, is aiming to select the next chief by consensus, but could resort to a vote.
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