Saturday, December 8, 2007

New IMF chief plans job cuts of up to 15%

The new head of the International Monetary Fund plans to cut up to 15 percent of the organization’s staff in an attempt to stabilize the fund’s finances as demand for its loans drops, the Wall Street Journal reported on Friday.

New IMF Managing Director Dominique Strauss-Kahn said in an interview with the Journal that he planned to cut 300 to 400 jobs out of the IMF’s total staff of more than 2,600. Layoffs would likely be necessary, he told the paper.

Strauss-Kahn said the fund was facing a deficit of $400 million a year by 2010 if loan demand failed to pick up, but estimated the job cuts could reduce that deficit by about a quarter.

The report said the cuts were part of an effort by Strauss-Kahn to win U.S. and European backing for the Washington-based institution to sell its gold and invest the proceeds.

”All this is possible only if...I have the commitment by different governments” to boost IMF income, the paper quoted Strauss-Kahn as saying.

The IMF chief, who started his post in November, said the IMF also has an important role in assuring that sovereign wealth funds act in a market-friendly fashion.

He said the IMF was putting together a ”best practices” code to guide such funds and it would be in their best interests to follow such rules to avoid being shut out of Western markets.

Strauss-Kahn, also told the Journal that he believed the euro was ”probably on the strong side” while the U.S. dollar, which is losing value, was moving in the right direction.

He said China should let its currency appreciate but added that would not be enough to restore balance to the world economy.

The IMF chief said China also needed to boost domestic consumption and diminish economic inequality at home, adding he would press that argument with Chinese leaders when he meets them in February.

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