The Economist magazine called for the resignation of Kristalina Georgieva, director of the Monetary Fund

“Why the head of the IMF should resign.” This is how blunt the title of one of the editorials is (“leaders”) From the latest issue of The Economist, which argues that Kristalina Georgieva, the current managing director of the IMF, cannot continue to lead the multilateral organization, since her role in the preparation of a report of the World Bank, published in 2018, when she was the second of the president of the institution at the time, Jim yong kim (South Korean of American nationality), undermined his credibility to remain number one in the Monetary Fund.

The text of the influential UK weekly captures some of the dissonances of the case and the official’s defense to the staff and the Board of the Fund and concludes that ‘although Ms Georgieva deserves sympathy , the episode does not fit well with his current role at the IMF. The Fund has its own influential research department and is also the custodian of standards for the compilation of global macroeconomic statistics. The IMF chief must have the ability to arbitrate when two of its biggest shareholders, the United States and China, face a new era of geopolitical rivalry. “

“Although Georgieva deserves sympathy, the episode does not fit well with her current role at the IMF” (The Economist)

The problem, he continues, is that Georgieva can no longer fulfill this role. Here is how he explains it: “Critics of multilateralism are already citing this episode (referring to what happened when Georgieva was number 2 at the World Bank) as proof that multilateral institutions are not capable of dealing with the problem. China; The next time the IMF tries to arbitrate a monetary dispute or help restructure the debt of a country that has borrowed from China, IMF critics will surely cite this investigation (of what Georgieva did), to undermine the credibility of the banking institution. “.

For the same reason, states The Economist, Georgieva, “an esteemed official of several international institutions, must resign, to defend the multilateralism that her intervention at the World Bank would have helped to defend”. And it ends with a figure of medieval chivalry. “Now she must do her part for multilateralism and throw herself at her own sword.”

This week Infobae He explained why Georgieva’s situation could have an impact on Argentina’s negotiations with the IMF. As in this article he said Hector Torres, Former Argentina representative on the IMF board, Georgieva’s position, even if she survives questions, is now uncomfortable, as the space for making political considerations has been reduced to possible observations or objections to an agreement with a country that could make the Orthodox Monetary Fund staff. Orthodoxy reinforced by the recent designation of the Brazilian Ilan Goldfjan as director of the Western Hemisphere Department, on which relations with Argentina depend. The Minister of the Economy, Martin guzman, maintains very good relations with Georgieva, from a first meeting they had at the Vatican, sponsored by Pope Francis.

The Economist recaps the case, which became known last week, when WilmerHale, a Washington study commissioned by the World Bank itself to investigate allegations of manipulation in the preparation of the “Doing Business” report, a kind of bible of simplicity or complexity, favorable or unfavorable, a company is required to operate in each of the 190 countries surveyed, on the basis of a series of data and indicators, it announces the results of its survey.

The report casts ink on the role that, fundamentally, Georgieva and Simeon Djankov, the lead author of the report and also of Bulgarian nationality, as the current IMF director, played to improve the skills and position of China, which from 85th place in the ranking of competitiveness or ease of doing business which results from the first version of the report, it moved to number 78, under the impetus of pressures and “methodological” recommendations of Georgieva and Djankov. At first, they sought to mix data from China with data from Hong Kong and Macao, two “special economic zones,” and eventually changed the methodology so that China performed better in terms of ease of trading. payment of taxes and other tax matters.

The Economist recalls that the “Doing Business” (which the World Bank decided to stop last week following this scandal) began to be published in 2003 and was gaining weight as an indicator of business decisions. So much so that China has started making regulatory changes (essentially, removing or speeding up procedures) in order to improve its scores in the dozens and dozens of indicators surveyed.

High profile, high pressure

The point, says The Economist, is that with the high profile that “Doing Business” won, there was also more pressure. In 2017, China was still dissatisfied with the results and its prime minister Li Keqiang, he started to complain to the Bank authorities. The WilmerHales investigation concluded that the Bank had “incorrectly” changed the results of China and three other countries, to avoid a fall in the positions of the Asian power, even as its reforms were accelerating. According to the survey, the magazine continues, the adjustments to the indicators were made at the request of then-Bank President Jim Yong Kim and Georgieva, who was in charge of implementing these issues with the help of Djankov, his compatriot. .

Georgieva says she “fundamentally” disagrees with the report’s findings, but she says, after interviewing dozens of Bank officials who helped shape the “Doing Business” that was eventually published in 2018, that Georgieva and Her team explored methodological changes to achieve better results for China. According to Georgieva, these changes were to “improve” the report, but a subsequent study by the Bank itself indicates that the methodological changes implemented resulted in more errors than they removed.

It may be, The Economist admits, that it was Jim Yong Kim who initiated the alleged review. Moreover, he admits, Georgieva had the “superior motive” to do so to defend multilateralism, since it was a question of satisfying China after a difficult standoff that had taken place over the quotas of the various countries of the World Bank.

In fact, one of the damning data in the WilmerHale report is a note that Georgieva wrote to one of the Bank employees who participated in (re) shaping the Doing Business, thanking him for “doing his part. in favor of multilateralism. “. This is why the article concludes by asking Georgieva to do his business now, and to resign, to save the reputation and credibility of the IMF, one of the key institutions of the multilateral system designed by the victors of World War II. over 75 years old. .

The noise surrounding the affair and the pressure on Georgieva grew stronger day by day. Paul RomerThe 2018 Nobel Laureate in Economics, who had been chief economist at the World Bank, took the opportunity to recall why he had strayed from the organization that year, so as not to have to report further. to Georgieva, whose integrity he questioned. Also spokesperson for the US Treasury, Alexandra Lamanna, noted that the institution, which heads Janet Yellen, I would review the matter, as the credibility and integrity of international organizations was at stake.

Before the publication of The Economist’s devastating editorial, Torres He told Infobae that “to stay in office Guzmán has to be mindful of Cristina and Kristalina will have to do something similar with Yellen”.

Yellen’s most trusted person to assess US stocks in multilateral entities and other international matters is David Lipton, former number two of the IMF, from which he moved away shortly after taking over Georgieva. Lipton had been, in 2018 and 2019, who monitored megacredit in Argentina, during the government of Mauricio Macri.

Yellen can also talk about it while having breakfast with her husband, the Nobel laureate in economics. Georges akerloff, who wrote with Romer, Georgieva’s interlocutor, an article on the financial “looting” that often occurs in bank liquidations. Akerloff is also the author, along with another Nobel Prize winner in economics, Robert shiller, from the book “Phishing for Folies: the Economics of Manipulation and Deception”, translated in 2016 into Spanish by “The Economy of Manipulation”.

And manipulation is precisely what Georgieva is now accused of.

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