EDITOR'S NOTE: The International Monetary Fund’s (IMF) president, Kristalina Georgieva, has been under fire ever since an investigation concluded that she helped doctor reports while at the World Bank to help China preserve its ranking in among the world’s economies. Despite mountains of damning evidence that Georgieva committed these offenses, Central Banking reports that the IMF’s board is deadlocked whether to keep her on as the organization’s leader. Former World Bank chief economist Paul Romer makes the case that Georgieva must go. He says that “When I raised these questions, Kristalina engineered a cover-up, a whitewash.” He also said that under the leadership of Georgieva and president Jim Yong Kim, the World Bank “lacked integrity”. Even with these revelations, the IMF’s 24-person board still can’t agree on Georgieva’s fate.
US and Japan call for resignation but China and many European countries back IMF head.
Photo: IMF/Kim Haughton
The International Monetary Fund’s board has failed to agree on whether Kristalina Georgieva should remain as its managing director after a series of lengthy meetings.
Georgieva’s position has been in question since the World Bank published a report accusing her of pressuring staff to distort data to favour China. The IMF head served as the World Bank’s chief executive, essentially its second most senior official, from January 2017 until late 2019.
The report, published on September 16, found Georgieva had acted to change the World Bank’s “Doing Business” rankings after pressure from the Chinese government. The IMF board, which includes representatives from the fund’s major donors, has held several meetings since the report’s publication but has failed to reach agreement.
The US and Japanese representatives have pressed for Georgieva’s resignation, according to several media reports based on sources with knowledge of the meetings. But representatives of most large western European countries, including Germany, France, the UK and Italy, have so far rejected such calls, alongside China and Russia.
The controversy over the IMF head comes at a particularly sensitive time, as the fund begins its annual meetings with its members and the World Bank. Georgieva will chair many of the sessions this week, and she is due to hold a press conference on Wednesday.
The independent report, conducted by US law firm Wilmer Hale, said Georgieva had been worried that China would block an upgrade of the World Bank’s capital. Georgieva and a fellow Bulgarian, former finance minister Simeon Djankov, pressured staff to stop China from slipping in the ratings, the report found.
Several anonymous officials were quoted in the Wilmer Hale report saying that Georgieva and Djankov were determined to change the rankings. The former World Bank official who oversaw the report, Shanta Devarajan, has however strongly denied claims he was pressured to change the data.
The IMF’s 24 board members have heard from representatives of Wilmer Hale and have spoken to Georgieva herself over the allegations.
The report also found that Djankov had pressured staff to change data in favour of Saudi Arabia. It said this was probably to reward the country for its payment to the World Bank for “reimbursable advisory service projects”. The report also alleged he had downgraded World Bank findings on Azerbaijan, apparently out of a “personal animus” against the country.
Georgieva strongly rejected the report when it was first published. “I disagree fundamentally with the findings and interpretations of the Investigation of Data Irregularities as it relates to my role in the World Bank’s Doing Business report of 2018,” she said.
Former World Bank chief economist Paul Romer alleged the World Bank had also changed the “Doing Business” ratings to reflect badly on Chile. He said officials did so after the country elected a left-wing government.
“When I raised these questions, Kristalina [Georgieva] engineered a cover-up, a whitewash,” Romer said, and added that the leadership of the World Bank under Georgieva and president Jim Yong Kim “lacked integrity”.
But another former World Bank chief economist, Joseph Stiglitz, took a sharply different line. He wrote in an article for Project Syndicate that the allegations against Georgieva were an attempt to stage a “coup” against her.
Georgieva had acted in an “entirely professional way”, and the Wilmer Hale report was a “hatchet job”, Stiglitz said. She had been trying to ensure the report best reflected the available data, he said.
Originally posted on Central Banking.