Treasury Secretary Henry Paulson said on Thursday he considered France's Dominique Strauss-Kahn a good candidate to take over the International Monetary Fund and urged continued reform at the lender.

Dominique Strauss-Kahn is a strong candidate and I look forward to continuing the dialogue with my counterparts at the Fund as the selection process moves forward to a conclusion this fall, Paulson said after the two met at Treasury for about a half hour.

Strauss-Kahn, who has the backing of European Union countries to become managing director of the IMF, is on a lobbying tour to rally support for his candidacy. Many developing countries question a past practice under which a European heads the IMF and an American heads the World Bank.

Paulson made no reference to that debate, but said he had restated his position that the IMF needed to remain on a path of bold reform to make sure that it remains a relevant institution in today's economy.

The IMF must vigorously implement its new decision on currency surveillance, Paulson said. It should follow through with fundamental reform of its quota structure, shifting significant weight to dynamic emerging markets.

He added that the IMF, which has been a lender to many countries but has seen that role shrink, needs to avoid mission creep into developmental activities, which typically fall more within the World Bank's scope of affairs.

Before Thursday, Paulson had repeatedly rebuffed reporters' attempts to get him to comment on Strauss-Kahn's candidacy, apparently concerned that doing so could draw him into the selection process before it was decided whether or not other candidates might be put forward.

South Africa, which chairs the group of 20 forum that includes developing countries, has said it was disappointed by Europe's nomination of a candidate without more consultation with others of the 185 countries that are members of the IMF.

The IMF's 24-member board has endorsed a procedure that would let other members nominate a candidate if they chose. The board is expected to make a choice in September, before current Managing Director Rodrigo de Rato steps down the following month.

International Monetary Fund