White House shocked by Treasury’s IMF promotion

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The White House was shocked that Treasury officials promoted Gita Gopinath to the International Monetary Fund’s No. 2 position without her consent, people familiar with the matter told Nerdshala.

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why it matters: The communication failure on who should replace Geoffrey Okamoto as first deputy managing director shows that there are differing opinions across the administration about how to use US leverage in the fund.

  • The IMF acts as the world’s economic firefighter, providing billions of dollars in financial aid to countries facing financial crises.
  • The No. 2 slot helps set policies, resolve differences between departments, and oversee the fund’s most critical and complex lending programs.
  • “The White House and the Treasury are in lockstep to ensure that the Fund can continue its important and necessary work, especially during a global economic recovery,” a White House official told Nerdshala.

Between the lines: By convention, the top IMF job goes to a European, with the US choosing the second-in-command. At the World Bank that relationship is reversed: the US takes the top spot, the Europeans the number 2 slot.

  • While most recent holders of the job have been academic economists, Okamoto, a former Trump official who joined the IMF in early 2020, had not.
  • hell quit your post In January.
  • Gopinath served as the Chief Economist of the IMF.

Intrigue: The move to replace Okamoto with Gopinath was led by David Lipton, a Harvard economics professor on leave to serve in the IMF. He currently serves as an advisor to Treasury Secretary Janet Yellen.

  • Lipton herself held the FDMD job until 2019, when the bank’s managing director, Kristalina Georgieva, hastened her departure in coordination with the Trump administration.
  • Lipton, who had a PhD in economics from Harvard, wanted to install an economist as the FDMD, and made the case for Gopinath.
  • Born in India, Gopinath completed his undergraduate and graduate degrees in India and received his PhD from Princeton. She is an American citizen as well as a foreign national of India.

go in: Over the summer, Georgieva began discussing with Gopinath the possibility of quitting her job as chief economist, according to an international official.

  • At the same time, Treasury officials were discussing him as Okamoto’s replacement and figuring out how to reinstate some of the traditional job responsibilities he had been stripped of before taking the job.
  • White House officials thought his candidacy had been abandoned when the IMF announced in October that he planned to return to Harvard.
  • They were surprised when the IMF announced last Thursday that it would become the FDMD.
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