IMF must adapt and downsize or die, new boss says

PARIS, Oct 1 (Reuters) The next head of the International Monetary Fund said that the multilateral organisation created to assist the world economy after World War Two needed to adapt to a new global economic order and downsize or die.

''At the end of the day, the very existence of the Fund will be at stake,'' Dominique Strauss-Kahn, the Frenchman chosen last Friday to succeed Spaniard Rodrigo Rato as managing director of the IMF on Nov 1, told a news conference in Paris yesterday.

The world's economy, the Socialist ex-finance minister said, must take account of the rise of China, India, Brazil and others, requiring European concessions of power in the organisation.

He also said he did not expect recent financial market turmoil to take too dramatic a toll on world growth.

Strauss-Kahn said he had traveled 100,000 km (60,000 miles) to convince many of the IMF's 185 member countries that he meant what he said in proposing a shake-up of the IMF to better reflect the rise of emerging market economies and the interests of less developed ones, plus the need to better regulate globalisation.

''The institution is priceless,'' he said, even if it needed to be leaner to achieve its purpose.

''I believe it because, in globalisation, we don't need less multilateralism, we need more multilateralism. We don't need less IMF, we need more IMF,'' Strauss-Kahn said.

NEW WORLD ORDER One of the biggest challenges he inherits is reforming the vote count to give China and the other emerging stars more of a say alongside the Western Europeans and the Americans who have dominated the agency over its existence of more than 60 years.

''I think nobody has in mind that the U.S. will see their share diminishing,'' Strauss-Kahn said, in deference to the United States' role as the IMF's biggest bankroller by far.

''The remaining countries are mostly European countries, Russia, some others. There is no way to obtain a solution without having those countries accept to have a part of their quota transferred to others.'' ''Yes, it's a zero-sum game.'' Russian Finance Minister Alexei Kudrin said in an article in the Financial Times of London on Monday that failure by the next head to give the up-and-coming more of a say would mean ''we will have to forget about the IMF as a serious global institution.'' MULTILINGUAL REFORMER Strauss-Kahn, who mixes economics and politics as easily and flits from his French mother tongue to English and German, is taking over a job which the Europeans, and above all the French, have monopolised since the IMF's creation.

Keen to dispel the idea that he was a shoo-in for the job, Strauss-Kahn said he had traveled around the world to rally support in rich, middling and low-income countries and that he believed in the need for reform of the institutions, and not just in terms of voting power, the key issue.

''The question of downsizing, focussing on the most important questions, is a question that is on the table,'' he said.

''There is no reason why an organisation, like most others, public or private, would not be able to be more efficient, more relevant and at the same time less costly.'' ''The Fund is at a kind of turning point. I am the designated managing director for reform,'' said Strauss-Kahn, whose term will run for five years.

As the IMF's sources of funding dry up Strauss-Kahn said the idea of selling some of its gold to generate better investment revenues was being considered but was not a panacea.

The key thing was to revamp the organisation, reach out to its sister organisation the World Bank as well as to others and to mend fences in a meaningful way with regions of the wold that felt hard done by during crises past, he said.

''My first priority is to cross (Washington's) 19th street and go to the other side where there's the World Bank,'' he said. ''My second priority is to cross the equator to Latin America and my third priority is to cross the Pacific to Asia.'' Reuters MP VP0503