WASHINGTON • The International Monetary Fund (IMF) yesterday threw its support behind its leader Christine Lagarde despite her conviction in a French court on charges of misusing public funds.
With international elites and their institutions facing populist criticism amid political and social change in the United States and Europe, the 24 directors of the fund decided this was not the time to leave the IMF rudderless.
A French court that considers cases against government officials on Monday found Ms Lagarde guilty of criminal charges linked to the misuse of public funds when she was France's finance minister nearly a decade ago. But the court did not impose a fine or sentence.
Ms Lagarde said she would not appeal the court's decision.
"I am not satisfied with it, but there's a point in time when one has to just stop, turn the page and move on and continue to work with those who have put their trust in me," she said in a statement she read to reporters at IMF headquarters in Washington.
In their statement, IMF directors said they had considered the court's decisions and had "full confidence in the managing director's ability to continue to effectively carry out her duties". Yet the verdict - with its potential to tarnish Ms Lagarde as a leader - came at a critical juncture for the IMF.
Founded and largely managed by Europeans and Americans, the fund oversees a global economy where faster-growing countries like China are seeking a greater role.
Ms Lagarde is the fourth of the past six leaders to hail from France and the difficult time the IMF has had in anticipating, as well as reacting to, the European debt crisis has caused some to wonder whether the time has come to appoint a non-European leader.
IMF doctrine, which advocates free trade and austerity for countries in financial difficulties, has been criticised as elitist and not sufficiently in tune with the populist movements sweeping the globe.
For now, the fund must confront more immediate challenges. With Britain leaving the European Union, Italy's future in the euro zone perhaps in doubt and the possibility of global trade wars being set off by Mr Donald Trump when he takes office, some have said Ms Lagarde's steady, experienced hand was needed more than ever.
The consensus among IMF directors is that Ms Lagarde's transgressions occurred when she was not at the fund - in contrast to those of her predecessor Dominique Strauss- Kahn, who was forced to resign amid a sex scandal. Since taking charge in 2011, she has proved to be a leader capable of presenting a softer side of the fund while fighting hard to bolster its legitimacy in the aftermath of the financial crisis.
"She has been a very effective leader," said Mr Edwin Truman, a specialist in global finance formerly at the Federal Reserve and the US Treasury. "Yes, there are big questions about the fund's future. But for her to have to step down now... that would be complicated."
US Treasury Secretary Jack Lew voiced the Obama administration's support, saying Ms Lagarde is "a strong leader of the IMF, and we have every confidence in her ability to guide the fund at a critical time for the global economy".