IMF boss Georgieva risks losing her job over China bias claims
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Kristalina Georgieva is the IMF’s managing director.
Samuel Corum | Getty Images
Kristalina Georgieva is the International Monetary Fund’s managing director. She has been accused of telling staff at the World Bank that she wanted to change a ranking to China’s advantage.
Georgieva denied the allegations. The scandal casts a shadow on the IMF’s and World Bank annual meetings, which are held this week in Washington D.C.
CNBC looks at these claims and how the IMF responds.
What is the source of these claims?
Georgieva was the chief executive officer of the World Bank starting in 2017, and joined the IMF late 2019.
The bank’s ethics committee requested a WilmerHale report. It stated that Georgia became involved directly in the efforts to increase China’s rankings during her tenure at the World Bank. [in the Doing Business Report]”
World Bank’s flagship annual research, the “Doing Business” ranking is an indicator of how friendliness a country is for doing business.
China was ranked 85 in the initial 2018 report. However, after Beijing’s intervention and influence, the country was repositioned to 78.Th place — the same level as the year before, according to the WilmerHale assessment.
Georgieva declared, in a September 16th statement: “I do not agree fundamentally with these findings and interpretations.” [of the WilmerHale report]”
The IMF Executive Board met at different times to discuss the allegations and their implications for the institution. A spokesperson for IMF stated that the Board had made significant progress in today’s assessment and was looking forward to concluding the matter very soon.
On Monday, members will meet again to discuss the next steps.
According to reports, countries such as France and Germany are still supporting Georgieva’s leadership of the institution. Some Americans are more cautious.
There are many questions regarding the future reputation of IMF.
How do people feel about it?
“As the IMF is grappling — intellectually and culturally — with the shift away from the so-called ‘Washington Consensus’ of fiscal restraint, since renamed ‘austerity’, and deregulation, it’s MD, Kristalina Georgieva, is battling the serious accusations,” Erik Nielsen, a group chief economist at UniCredit, said in a note Sunday.
“And during the investigation, it was claimed that she leaned more recently on IMF staff this week to soften their criticisms of environmental policies in BrazilFollowing intervention from Brazil, the IMF was able to reopen. “It is not surprising that once a magnificent institution, the IMF culture has fallen apart,” he said.
Following a Bloomberg article about the IMF, the spokesperson said that the IMF had made the change to the report’s language as part of their normal processes. Bloomberg reports that the spokesperson said “the IMF regards climate change as a critically important economic issue” and also stated, according to Bloomberg: “The IMF considered it to be a worldwide problem economically. This point was made with respect to Brazil in the staff report.”
Timothy Ash, a Bluebay Asset Management senior sovereign strategist for emerging markets, called this issue a fundamental crisis of faith in the IMF.
“The damage has already been done. “People are questioning the IMF’s work and not only those with ties to the World Bank Doing Business Report,” he stated in a research note.
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