BAK
JF-Expert Member
- Feb 11, 2007
- 124,790
- 288,005
Allegations of favoring China could erode confidence in IMF chief
FRIDAY SEPTEMBER 17 2021
Kristalina Georgieva has been IMF managing director since 2019. PHOTO | FILE
By AFP
More by this Author
Washington. A storm of controversy threatens to undermine Kristalina Georgieva's leadership of the IMF as experts, US lawmakers and the Treasury scrutinize her actions in a former senior role at the World Bank.
The situation also could prove a challenge to Democratic US President Joe Biden's administration, since it gives fodder to Republicans dubious of, if not outright hostile to, the multilateral institutions, especially their dealings with China.
An independent investigation released Thursday found that Georgieva, then World Bank CEO, was among the institution's leaders who pressured staff into changing data to paint China in a more favorable light in the 2017 edition of a closely-watched business favorability ranking.
IMF member countries will "have to make a decision about whether they're comfortable with, with her continuing in that role," Nobel laureate Paul Romer told AFP.
"I think they should think about their options."
Romer was World Bank chief economist at the time, and criticized Georgieva for engineering a "whitewash" of separate concerns he raised about the institution's flagship Doing Business report.
He ultimately resigned in January 2018 after going public with his criticisms.
- IMF board to meet -
The United States will be crucial in determining Georgieva's fate since Washington holds the biggest voting share in the International Monetary Fund, and the Treasury on Thursday said it was analyzing the report.
"These are serious findings," the department said in a statement. "Our primary responsibility is to uphold the integrity of international financial institutions."
Georgieva has disputed the findings of the investigation by law firm WilmerHale, which was commissioned by the World Bank board and examined tens of thousands of documents and interviewed more than three dozen current and former staff.
She informed the IMF board about the situation and denied the charges. The body was scheduled to meet Friday, though its agenda does not mention the report.
Republican lawmakers already have raised questions about Georgieva's conduct.
Arkansas Representative French Hill called the report "alarming" and said the multilateral lenders' "reputation is now tarnished."
If the allegations are true, "The IMF board should promptly assess her service in the top job there," Hill said in a statement.
The situation was another example of "how the Chinese Communist Party systematically works to hijack multilateral institutions," he said
- 'Pretty damning allegation' -
In light of the investigation, the World Bank scrapped the Doing Business rankings, which classified countries based on their business regulations and economic reforms, and has caused governments to jockey for a higher spot to attract investors.
The probe also found that Georgieva along with her associate Simeon Djankov, a former Bulgarian finance minister who created the report, and Jim Yong Kim, then-president of the bank, pressured staff to change the calculation of China's ranking to avoid angering Beijing.
The push came while bank leadership was engaged in sensitive negotiations with Beijing over the bank's lending capital.
The IMF has its own a series of reports on national economies, which could be called into question following the allegations against Georgieva.
Justin Sandefur of the Center for Global Development had written extensively about the problems with the methodology in the Doing Business ranking, which "made it ripe for this sort of interference and manipulation."
After the latest revelations, "it doesn't look great," for Georgieva, he told AFP.
"For the head of the IMF to have been involved in data manipulation is a pretty damning allegation," he said. "That does seem like a real hit on their credibility."
Hill called on Treasury Secretary Janet Yellen to report to Congress on the situation and find ways to "ensure strict, transparent data integrity in the reports and assessments of the World Bank and the IMF."
Likewise, Kentucky Republican legislator Andy Barr called on Treasury to investigate the "bombshell findings," saying, "Georgieva's involvement with data manipulation for China's benefit is alarming."
He said Georgieva's leadership of the IMF calls into question other dealings with Beijing and "has implications for China's influence at the Fund. Ensuring integrity at the IMF is essential."
Georgieva appeared on an IMF panel discussion Friday without commenting on the controversy, and is due to attend the United Nations General Assembly next week.
She is also expected at the IMF and World bank annual meetings in early October
