Al-Ahram Weekly Online   9 - 15 October 2008
Issue No. 917
Economy
 
Published in Cairo by AL-AHRAM established in 1875

'One of us'

Youssef Boutros Ghali lands big responsibility as IMFC chair, writes Niveen Wahish

Youssef Bourtros Ghali, Egypt's finance minister, is a favourite in the international financial community. Two years in a row, 2005 and 2006, he was chosen by Euromoney Institution to receive the Emerging Markets award for Finance Minister of the Year for the Middle East region.

This week Ghali, 56, was chosen to chair the 24-member International Monetary and Financial Committee (IMFC), the policy- steering committee of the International Monetary Fund (IMF). This makes him the first representative from a developing country to land this position, traditionally held by a member of the industrialised world at large ever since the IMF's establishment in the mid-1940s. This time round, Ghali beat India's Finance Minister Palaniappan Chidambaram to the post. It was previously held by Tommaso Padoa-Schioppa, Italy's former minister of economy and finance, who resigned in May 2008.

Although Ghali's election makes him eligible for a three-year tenure, he may in reality only hold this position so long as he continues in his post as Egyptian finance minister.

The IMFC advises the IMF's Board of Governors on supervising the management and adaptation of the international monetary system, and on dealing with sudden disturbances that might threaten the stability of the system. It also deliberates on the principal policy issues facing the IMF.

Ghali will immediately see to his new responsibilities as he flies next week to Washington for the IMF's annual meeting scheduled for 11 October. He also seems to have his agenda clear. "The most important challenge ahead of us is to put a programme that allows financial organisations to interfere in order to rebalance the global economy," Ghali has been quoted as saying. He was referring to the global credit crunch that has avalanched into possibly the worst financial crisis since the 1930s. The finance minister, who has a habit of boiling down the most difficult financial terminology into simple language, has described the current financial crisis as a "sickness that appeared in the US, and the European Union has caught the virus."

The IMFC has 24 members, reflecting the composition of the IMF Executive Board. Each member country that has a say in the selection of the IMF's executive director appoints a committee member. These members are IMF governors, ministers, or other officials of similar rank. The committee usually meets twice a year, ahead of the IMF annual meetings in the autumn.

Ghali's election is seen by observers as a major step towards opening up the IMF's upper ranks to emerging economies, many of whose governments have long sought after a bigger stake in the global financial institution. It will also give him the chance to try to do something about the IMF's policies, which he has recently criticised, particularly with regards to how the international institution has managed, or perhaps mismanaged the current financial crisis.

However Ahmed Galal, managing director of the Economic Research Forum, tells us not to expect miracles. "The world is a very heavy ship for just one person to steer," he said, referring to the notion that it is very difficult for one individual to make a difference to a large institution such as the IMF. Nonetheless he sees the fact that "one of us" has been chosen for the post as positive. "The world is changing and developing countries have more of a voice than they had before. Hopefully this will be the start of a process, particularly since the IMF is ripe for change," Galal said. Efforts to give emerging market countries and developing nations a bigger say in the running of the IMF began during Rodrigo de Rato's term, ending in 2007.

But while charged with tackling crises on the international front, Ghali's task at home is no piece of cake. He will need all his former success in macro and microeconomic management to cure the ills of an economy which has not escaped the effects of the global financial crisis. He was recently quoted as saying that he could not give an estimate of Egypt's economic growth rate because there were simply too many variables involved.

Ghali has been Egypt's finance minister since summer 2004. Through the past four years he has implemented a series of reforms, foremost among which is the tax and trade reforms. Before becoming finance minister, he managed other equally important ministerial portfolios including foreign trade, international cooperation and economic affairs. He played a prominent role in negotiating Egypt's 1987 and 1991 stand-by arrangements with the IMF and the debt rescheduling agreements with the Paris Club.

No doubt Ghali will not feel estranged in the IMF. Up until 1986 he was an IMF employee, in which he held the position of senior economist. A Cairo University graduate with a degree in economics, he later obtained his PhD in economics from Massachusetts Institute of Technology, US in 1981.

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