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Tag: International Monetary Fund

Stanley Fischer, Supported by Fayyad, Turned Down by IMF as Leader Candidate

Governor of the Bank of Israel, Stanley Fischer, is credited with assisting Israel through the 2008 global financial crisis; he is criticized for funding Hamas in the Gaza Strip.

Recently, Mr. Fischer formally announced his candidacy to lead the International Monetary Fund. While the selection process is a political one, Mr. Fischer has received support from Finance Minister Yuval Steinitz, who said:

“Were it purely professional it would be hard-pressed to find a better person than Fischer.”

Salam Fayyad disputed Palestinian Authority Prime Minister supported Mr. Fischer, saying the Israeli would make a ”great managing director” for the IMF and is:

“A superb human being…He is supremely qualified for the job. Indeed, it’s difficult to see how one can be more qualified…”

On a side note, Hamas has refused to recognize Fayyad, a political independent, as Prime Minister. Fayyad received his PhD in economics from the University of Texas, as well as working for the IMF in the 1980s; so he is a good man to ask.

As mentioned, the recently announced “reconciliation” between the government in the West Bank, led by Fatah and the terrorist group Hamas in control of the Gaza Strip is threatening Fayyad’s political status.

But Monday night Fischer was notified that his candidacy was disqualified because of his age, 67. IMF rules state the Managing Director must be under 65 when taking office for the five-year position. Fischer was hoping the IMF board would waive the restriction, saying it is “not relevant today.”

Fischer is in the second year of his second five-year term as the chariman of Israel’s bank. He was hoping to take over at the IMF for Dominique Strauss-Kahn of France, who resigned on May 14 after his arrest on charges of attempted rape of a maid in a New York hotel.

Fischer had this to say:

“I will proudly and happily continue in my role as Governor of the Bank of Israel, to deal with the challenges facing the Bank of Israel and the Israeli economy. I would like to thank the Prime Minister and the Minister of Finance for their unconditional support when I decided to submit my candidacy, and for their expressed hope that I will continue to serve as the Governor of the Bank of Israel – as I shall happily do…”

The finance minister of France, Christine Lagarde, is considered to be the front-runner in the IMF race. The final decision will be made toward the end of the month.

Fischer was the thesis adviser to Ben Bernanke, chairman of the U.S. Federal Reserve, when he was pursuing his doctorate in economics from MIT and is a former deputy managing director of the IMF.

Bringing Down Israel’s Debt and More Financial Scoop

This week the International Monetary Fund (IMF) urged Israel to phase out an unconventional monetary policy – by which it intended the Bank of Israel’s habit of intervening in the country’s forex market.

Actually, the Bank of Israel had ceased this activity during a two-month hiatus but just began again by buying between $100 million to $200 million. By mid-day the buying pulled the dollar’s exchange rate from NIS 3.77 to NIS 3.80.

Market sources said that the central bank’s move was designed to “soak up a surplus supply of foreign currency” which had caused a sharp appreciation in the “basket of currencies.”
The IMF also called on Jerusalem to put together a plan which would sharply reduce Israel’s high public debt burden.

Recent increases in short-term interest rates, in both August and December, were “appropriate” to prevent an uptick of inflation as the economy recovers from recession; and Israel applauds herself on her handling of the fiscal disaster.

However the IMF urged the central bank to stop intervening in the foreign exchange market and to restore the shekel’s status as a free-floating currency.

Regarding Israel’s debt, the IMF recommends that the country reduce its ratio of debt to gross domestic product, to 70% by the middle of the next decade, and aspire to a ceiling of 60% by 2020. It is expected that the ratio will “edge up” to 80% by the end of 2010.

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