Frenchman Dominique Strauss-Kahn took over the reins of the International Monetary Fund last week, promising to push ahead with reforms aimed at giving major emerging market economies and low-income countries a greater say in the multilateral lender's policies. What does Strauss-Kahn's leadership of the IMF mean for Latin America? Do you see the IMF playing an active role in the region's economies over the next five years?

Resident Fellow Desmond Lachman

Latin America should expect a kinder and a gentler IMF under Mr. Strauss-Kahn's leadership. Judging by his socialist background and by his most recent pronouncements, the region should expect him to push very hard for more Latin American votes and greater voice at the IMF. The region should also expect Mr. Strauss-Kahn to be more sensitive to poverty issues as well as to push for more focused and less harsh IMF lending programs.

It is far from clear, however, how much progress he will make in improving the IMF's legitimacy. To date, the European countries have been highly reluctant to cede any ground at the IMF to the emerging market economies. And there seems to be no compelling reason for them to materially change their position under his leadership.

In the immediate term, there is little likelihood of new IMF lending programs to the larger Latin American economies, which are presently enjoying unusually favorable commodity prices and remarkably easy access to the international capital market. Latin America would, however, be making a grave mistake to think that those conditions will last indefinitely given the present bursting of the US housing bubble and the ever growing signs of global financial system strains. Before Mr. Strauss-Kahn's term is out, he will find knocking at the IMF's door a number of Latin American countries like Argentina and Venezuela, which are presently squandering the good years with very bad macro-economic policies.

Desmond Lachman is a resident fellow at AEI.