South Africa's Trevor Manuel ruled himself out of the race for the IMF's top job on Friday, making French finance minister Christine Lagarde an even firmer favorite although the threat of a judicial inquiry remains.

Emerging market powers like Russia, India and China have declared they want an end to Europe's grip on the top job at the international lender, calling time on a pact that puts the IMF in European hands and the World Bank run by an American.

It is important to understand that decisions take place in the context of world politics. Against that backdrop, I have decided not to avail myself, Manuel, a respected former finance minister, told a news conference.

He said it would be most unfortunate if we end up with a European who is bound by the EU.

The United States and Europe hold 48 percent of votes at the International Monetary Fund, emerging nations just 12 percent.

With Lagarde lobbying African officials in Lisbon over her candidacy and the window for nominations closing on Friday, Emerging Markets magazine had earlier reported that South Africa would nominate Manuel for the job.

Manuel, who handled Africa's biggest economy deftly for a decade, has long been touted as an ideal developing-world candidate and many had seen him winning more support than the only other declared rival to Lagarde, Mexican Central Bank chief Agustin Carstens, whose policy views are viewed as too conservative by many of his emerging market peers.

Lagarde, an adept negotiator with hands-on experience in the euro zone's debt crisis, is seen as the clear favorite despite a legal investigation into her role in a 2008 arbitration payout that will hang over her candidacy.

A top French court on Friday put off until July 8 its decision on whether to open a formal inquiry into allegations brought by opposition left-wing deputies that she abused her authority in approving a 285 million euro payout to a businessman friend of President Nicolas Sarkozy.

A French finance ministry official told Reuters the legal process was proceeding normally and Lagarde earlier told reporters in Lisbon, where she attended the African Development Bank's annual meeting, that she was confident about the outcome.

She has denied any misconduct in the case and told the daily Le Parisien in comments published on Friday that if an inquiry goes ahead she would only be called upon as a witness and not have to defend herself in court.

Lagarde has flown to Brazil, India and China to tout her merits for the IMF job, and carries on her tour to Saudi Arabia and Egypt this weekend. On Thursday she spent an hour tweeting with the general public over her candidacy.


The African Union said on Thursday it wanted to see a non-European in the job but emerging market powers have failed to coalesce behind one candidate to challenge Europe's traditional grip on the job.

Lagarde is still the favorite, said Jacques Reland of the Global Policy Institute. The BRICS are still quite divided and I don't think a new candidate from South Africa can threaten her candidacy given the importance of the European and U.S. vote.

The Fund will name its new managing director on June 30.

Frenchman Dominique Strauss-Kahn quit the post in May over charges he tried to rape a New York hotel maid.

A Reuters exclusive report that Secretary of State Hillary Clinton has been in talks about leaving her job next year to head the World Bank made it look even more likely Lagarde will get the IMF job, reaffirming the tradition of a European at the Fund and an American at the World Bank.

Four of the IMF's 10 managing directors since 1946 have been French but Lagarde, 55, would be the first woman in the job.

A medal-winning former synchronized swimmer and high-flying corporate lawyer, she has played a key role in Europe's battle to recover from economic crisis and is France's G20 negotiator on economic issues as it holds the year-long presidency.

Carstens has an economics PhD from the University of Chicago, a haven for proponents of deregulation and laissez-faire economics.

(Additional reporting by Thierry Leveque in Paris and Lisbon and Johannesburg bureaux; Editing by Mike Peacock)