New Delhi: The condition in Europe is serious, International Monetary Fund (IMF) managing director Dominique Strauss-Kahn said on Thursday.

Kahn’s comments come ahead of a crucial European Central Bank meeting, which is under pressure to act to help the euro zone contain a crippling debt crisis that threatens to affect the United States and Asia.

Strauss-Kahn said he favoured new heads of the World Bank and the Fund to be from countries other than Europe and the US.

Union finance minister Pranab Mukherjee shakes hand with IMF managing director Dominique Strauss-Kahn before their meeting in New Delhi on Thursday. AP Photo

This comes in the backdrop of reports that Planning Commission deputy chairman Montek Singh Ahluwalia may be in the race for IMF chief.

“Let us be candid. I think the so called agreement between the US and European whereby the IMF head was European and World Bank president was an American is over.

“So I think it would be just fair that the next leaders of the two institutions will come from somewhere else in the world," Strauss-Kahn told reporters here in reply to a query on the issue.

Strauss-Kahn, who served as the minister of economy, finance and industry of France, however, said this did not mean that Europeans would be forbidden to lead the IMF forever.

The New York Times had earlier reported that Ahluwalia is among the probables to succeed Kahn in the IMF.

The report said the clout and role of the international lender has increased substantially in the emerging markets.

“Whatever he (Kahn) decides, his successor is likely to be someone from the developing world.

“Frequently mentioned names include Mohamed A El-Erian, the American-born son of an Egyptian diplomat and an economist who leads the giant bond investor Pimco; Montek Singh Ahluwalia, a senior Indian planning official; and Arminio Fraga and Guillermo Ortiz, former heads of the central banks of Brazil and Mexico respectively," the daily had said.

Strauss-Kahn was talking to reporters after a luncheon meeting with finance minister Pranab Mukherjee and his ministry officials.