Paschal Donohoe reportedly considering bid to be next head of IMF

Paschal Donohoe, the Minister for Public Expenditure and head of the group of euro zone finance ministers, is in the running to become the next head of the International Monetary Fund (IMF), according to reports from financial news agency Bloomberg.

A spokeswoman for Mr Donohoe said he was “fully focused on his current work and responsibilities in Ireland and as President of the Eurogroup.

“He is committed to serving his full mandate in Europe and will also be a candidate in the next election in Ireland,” she said, but did not elaborate further.

Mr Donohoe is reported to be holding “preliminary conversations” about the possibility of becoming the IMF’s next managing director.

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He was in Washington this week in his capacity as head of the Eurogroup, where he met a number of senior US government and Federal Reserve officials, including the Secretary of the Treasury Janet Yellen, chair of the Federal Reserve Jerome Powell, director of the National Economic Council Lael Brainard and chair of the White House Council of Economic Advisers Jared Bernstein.

Mr Donohoe is known to be particularly close to Ms Yellen, with whom he has met regularly in recent years. The pair had dinner in Washington this week.

Mr Donohoe’s relationship with Ms Yellen was cemented in the negotiations over a global minimum corporation tax rate two years ago when Ireland eventually conceded to raise its traditionally low 12.5 per cent rate to 15 per cent for large companies. Ireland’s agreement was seen as important in securing the overall deal that Ms Yellen had pushed for.

The term of the current IMF boss, Kristalina Georgieva, ends in September next year and she has not yet said if she will seek a second term. But Bloomberg reported that her support from the US has wavered following accusations in 2021 that she improperly influenced a World Bank ranking of China’s business climate.

Mr Donohoe secured a second term as head of the Eurogroup last year, despite stepping down as Minister for Finance under the Coalition deal between Fine Gael and Fianna Fáil and returning to the role as Minister for Public Expenditure. While the Eurogroup position is normally held by a finance minister, Mr Donohoe’s European colleagues were willing to keep him in the role, an indication of his high standing in Brussels and around the EU.

At home, his departure would be a significant blow to Fine Gael, depriving Taoiseach Leo Varadkar of a close party ally and a respected public figure.

However, it is unclear how other IMF members, particularly those from emerging market economies, would react to another European candidate.

The IMF has always been led by a European national, in a tacit understanding between Europe and the US, which in turn gets to nominate the president of the World Bank.

Mr Donohoe’s potential bid emerges as one of the top possible candidates, Spanish economy minister Nadia Calvino, is moving closer to taking on the presidency of the European Investment Bank. – Additional reporting: Bloomberg