Lagarde takes on top IMF role at challenging time

The executive board of the International Monetary Fund (IMF) on Tuesday selected Christine Lagarde as managing director of the Fund and chairman of the executive board.

Lagarde will begin a five-year term on July 5, 2011. She is the first woman appointed to the top IMF post since the institution was created in 1944.

The executive board selected "by consensus", which means no formal vote was taken.

Lagarde takes over at a difficult time for the Fund, with the shadow cast by the circumstances of former managing director Dominique Strauss-Kahn's departure after being arrested on suspicion of sexual assault still lingering.

The IMF has also unleashed some damning criticism of the United States. In its annual report of the United States' economy, the IMF urged prompt action to raise the debt ceiling of $14.3 trillion. The country has reached the limit and will run out of options by August 2, which would then see a default, with unimaginable consequences.

The Fund recommended that the rate "should be raised expeditiously to avoid a severe shock to the economy and world financial markets" adding that failure to do so could mean the country's AAA debt rating would be downgraded.

"These risks would also have significant global repercussions, given the central role of US Treasury bonds in world financial markets," the IMF said.

As Lagarde secured the backing of the US for her candidacy as manging director, she will have to contend with these gathering pressures. In her statement to the executive board before they made their final decision on the next managing director, she was explicit about how she would handle the European debt crisis also.

Lagarde said she would "not shrink from the necessary candor and toughness" in discussions with European leaders.

Lagarde, 55, has been the minister of finance of France since June 2007. Before that, she served as France's minister for foreign trade for two years. Lagarde is a qualified anti-trust and labour lawyer, having practised as a partner with the international law firm Baker & McKenzie, where she was elected as chairman in October 1999. Lagarde has degrees from the Institute of Political Studies and from the Law School of Paris X University, where she also lectured prior to joining Baker & McKenzie in 1981.