Joseph Stiglitz defended Georgieva | Fund owner questioned for alleged favor to China

The Economist Joseph stiglitz, Price Nobel Prize and professor at Columbia University, forbidden to the Director of the IMF, Kristalina Georgieva, World Bank accusations. He linked the investigation against Georgieva to the progressive nature of his management at the head of the international organization. “An attempted coup d’état at the IMF,” Stiglitz headlined in his article published on the project-syndicate.org portal.

“Many financial market participants believe that the IMF is not acting strongly enough as a creditor,” Stiglitz said, referring to the recent worldwide issuance of SDRs from the organization to strengthen the reserve position of peripheral economies. Also mention the Argentina noting that “in the restructuring which began in 2005, the Fund showed the limits of how much the country could pay, that is, to what extent the debt was sustainable. “More than ever, the world needs Georgieva at the IMF,” Stiglitz concluded.

Georgieva to deal with World Bank survey, an entity he managed between 2017 and 2019, before assuming the Fund. The Bulgarian economist’s questioning is based on a alleged irregularity committed in favor of China and other countries, which would have been positioned artificially high in a ranking of economies that are easy to do business, according to a study commissioned by the World Bank from the law firm WillmerHale.

The indictment explicitly involves Georgieva with former World Bank President Jim Yong Kim in a maneuver to favor China while negotiating with this country a capital injection for the World Bank. China was ranked in the ranking of the report To do business 2018 in the position 78 when it should have fallen to 85.

Defense

“It’s the same Georgieva who had a excellent response to the pandemicquickly providing funds to countries to keep them afloat and deal with the health crisis. He was also the one who succeeded in lobbying for IMF issues $ 650 billion in SDRsso essential to the recovery of low and middle income economies. And she positioned the Fund with a global leadership in responding to the climate change crisis“wrote Stiglitz

“It is not surprising that there is people who are dissatisfied with the direction taken by the IMF under Georgieva’s leadership. Some believe the Fund should stick to its own business and not get involved in climate change. Others don’t like the gradual turn which means reducing the focus on austerity and a greater focus on poverty and development and a greater awareness of the limits of the market, ”continued the Nobel Prize winner.

Stiglitz recounted the direction Georgieva would give to the IMF with the organization’s position before the Argentina in the renegotiation of 2005, which would have acted before the private creditors defining the sovereign debt sustainability framework.

Stiglitz made specific reference to the survey the World Bank commissioned from WilmerHale. “Having spoken directly with those involved and knowing the process, the investigation seems malicious to me. Georgieva acted very professionally, doing exactly what I would have done: asking those who work with me to make sure the numbers are correct, “he said.

According to the WilmerHale report, Georgieva was allegedly involved in modify the methodology and thus improve the position of China. He claims that Georgieva told the official responsible for implementing these changes that he had made “something for multilateralism“and would have thanked you for your help in” solving the problem “with China.

The change, the Columbia economist assures that “Shanta Devarajan, the head of the unit who in 2018 reported directly to Georgieva, insists that has never been pressured modify data or results “.

To do business

Following the scandal, the World Bank decided to stop the publication of the To do business 2020. “The only positive result of this episode could be the stopping To do business. 25 years ago, when I was Chief Economist of the World Bank and this report was prepared by a division other than the Bank, I thought it was a horrible product. Countries got good marks when they had low corporate tax rates and weak labor regulations, ”Stiglitz said.