IMF Director Announces Plan To Step Down Two Years Early

Rodrigo de Rato, managing director of the International Monetary Fund, said yesterday that he will step down in October for personal reasons, leaving the Washington-based post two years before his term ends.

The departure of de Rato, a former Spanish finance minister who has led the agency since 2004, leaves the IMF and World Bank in simultaneous transition for the first time in the history of the two global institutions, which were created after World War II. Robert B. Zoellick takes the helm of the World Bank on Sunday after the ouster of Paul D. Wolfowitz six weeks ago.

Treasury officials, who fought to keep Wolfowitz in office as pressure for his ouster mounted from Europeans, would not comment yesterday on whether the United States plans to aggressively exert its influence in the selection of de Rato's successor, traditionally a search conducted by European governments.

De Rato, 58, cited "family circumstances and responsibilities, particularly with regard to the education of my children," as the primary reasons for his departure in a statement, but Spanish politicians speculated that his return to Spain would mark his reemergence as a major player in the country's conservative Popular Party. The country is set to hold elections in March. The Spanish newspaper el Pais reported that de Rato plans to take a job with a private firm.

During his tenure at the IMF, de Rato helped oversee more than $50 billion of debt reduction for poor countries. Major changes at the institution, which is losing about $100 million a year, were slow, according to economists and nonprofit groups that monitor the institution.

"The timing of de Rato's departure represents a challenge for the IMF given the ongoing reform issue that he has been driving," said Nicolas Checa, a managing director at Kissinger McLarty Associates, a global consulting firm.

Treasury Secretary Henry M. Paulson Jr. lauded de Rato's work, saying that he "brought vision and dedication to his tenure" and that his "leadership was also instrumental in the fund's revision of its exchange-rate surveillance framework."

The exchange-rate surveillance, announced last week, allows the IMF to point out countries that manage their currencies in ways that give them an advantage in foreign trade. The issue has been pushed by U.S. officials, particularly to monitor China, which officials say keeps its currency weak to boost exports.

De Rato, who plans to remain in his position through the World Bank and IMF annual meetings in the fall, said he is "absolutely determined to make further progress," including giving developing countries a louder voice in the IMF's voting structure.

But with the IMF's loan portfolio at $11.8 billion, down from $81 billion in 2004, those changes are not enough, said Adam Lerrick, an economics professor at Carnegie Mellon University and a visiting scholar at the American Enterprise Institute.

"When an institution is in crisis, modest reforms will not suffice," Lerrick said. "The IMF now has a marginal role in the international financial system, and if it doesn't change soon, it will be irrelevant."

By tradition, European governments nominate the director of the IMF, and the United States selects the president of the World Bank.

Treasury spokeswoman Brookly McLaughlin declined to comment on the U.S. approach in the selection of de Rato's successor, given Europe's leading role in seeking the ouster of Wolfowitz. "Obviously it is an important position, and it's an institution we think is really important, and we've been very involved in reform efforts," she said.

Oxfam International, a nonprofit group that fights global poverty, and other groups have pressed for changes to the IMF's selection process, which is typically a backroom exercise run by powerful countries. With Zoellick's recent appointment by the Bush administration after a U.S.-only search, however, Europeans may restrict their search to candidates from that continent.

"De Rato himself has said that his successor must be chosen in an open and transparent way," said Elizabeth Stuart, an Oxfam International senior policy adviser. "They have to look around the world for the best person. It can't just be another European automatically parachuted in."