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International Monetary Fund managing director Rodrigo Rato, in a surprise announcement, said yesterday he would step down in October for personal reasons, cutting his tenure short by two years.
Rato, who took over at the fund on June 7, 2004, said he would depart after the IMF's fall meetings in October.
"I have taken this decision for personal reasons," Rato said, shortly after informing the IMF board.
"My family circumstances and responsibilities, particularly with regard to the education of my children, are the reason for relinquishing earlier than expected my responsibilities at the fund," he added.
Rato, a former Spanish finance minister under then Prime Minister Jose Maria Aznar, is estranged from his wife and has three children who live in Madrid. He often stops over in Spain on his IMF travels to see them.
Rato's regular visits home have prompted speculation that he was still interested in political office after being passed over to succeed Aznar as the leader of Spain's conservative Popular Party, which was unexpectedly defeated at the polls in March 2004.
"Everyone would welcome him with open arms," Popular Party communications secretary Gabriel Elorriaga said.
But Spanish news agency Europa Press, quoting sources close to Rato, said he would not return to Spanish politics and planned to join a private company in Spain.
Still, his resignation notice comes as Spain prepares for a March 2008 general election, which is likely to be a closely contested poll.
Rato's departure from the IMF comes in the middle of the biggest shake-up in the institution in a generation, amid debate over the IMF's relevance and whether an outdated membership voting structure ignores the rise of economic powers in Asia, Latin America and elsewhere.
Rato's legacy as IMF chief will be the reforms he launched in September 2004 that seek to modernise the 62-year-old institution and give developing nations a greater say in the way it is run after years of dominance by Europe and the United States.
Without the reforms, many fear the IMF would not be able to wield the influence it needs to police the global economy at a time when fewer countries are seeking its emergency loans and governments often ignore its policy advice.
In his statement yesterday, Rato said he was determined to make progress on the reforms in the coming months, including reaching consensus among members on a second round of changes to increase the IMF voting power of developing countries.
"I hope that my departure can provide an incentive for all of us to work together constructively and effectively with the membership over the next few months to try and accelerate the timetable in these areas and ensure that we make significant progress by the time of the annual meetings," Rato said.
In a major step last week, Rato announced the IMF had agreed to more rigorous scrutiny of exchange rate policies of its members that updated its mandate for global surveillance.
Some critics said the move meant that Rato - and the IMF - were doing Washington's bidding in a feud with China over the value of the Chinese currency. But some IMF officials said it was necessary to prevent the dispute from escalating and to ward off damaging US legislation that would punish China.
During his three years at the helm of the IMF, Rato fought back when US pressure groups accused him of not doing enough to force Beijing to relax its rigid currency regime.
He also found himself in the middle of a dispute between private creditors and Argentina, which refused to repay all of its debts following a massive sovereign debt default in 2001.
"Rodrigo helped to strengthen the fund by creating this road map for reform, which will enable the fund to remain a strong, relevant institution and resource for the global financial system," US Treasury Secretary Henry Paulson said.
Britain's new Prime Minister Gordon Brown, who chaired the IMF's policy-setting committee, said Rato's influence was instrumental in pushing through reforms at the IMF.
"Rodrigo was a reforming managing director of the IMF, pushing through reform of its surveillance and governance, just as he had been a reforming finance minister, leading the debate on economic reform in Europe," Brown said.
Rato possessed political skills that uniquely qualified him to deal with the pressures of the job, said Tom Dawson, a former IMF spokesman and ex-US representative at the fund.
"He had enormous political skills and his being there helped deliver the reform strategy that a lot of people were sceptical could ever be presented, and I think it got a lot more support than people thought," Dawson said.
"That leaves it in very good shape and I think it would be a great legacy for him for the membership to follow through on what is something that deserves strong support," he said.
- Reuters
