IMF boss Georgieva at risk of losing job amid allegations of China’s bias

Kristalina Georgieva, managing director of the International Monetary Fund, is under pressure after allegations she asked World Bank staff to change a ranking in favor of China.

Georgieva denies the allegations. But the scandal overshadows the annual IMF and World Bank meetings taking place this week from Washington, DC.

CNBC is examining the allegations and what the IMF is doing about it.

Georgieva was Managing Director of the World Bank from 2017, before joining the IMF at the end of 2019.

A report, prepared by law firm WilmerHale and commissioned by the bank’s ethics committee, released in September, said that during her time at the World Bank, “Georgieva was directly involved in efforts to improve China’s ranking [in the Doing Business Report]. “

The “Doing Business” ranking is a flagship annual research study by the World Bank that assesses how friendly a nation is for doing business.

In the 2018 report, China was initially ranked 85, but after influence from the management team and interventions from Beijing; the country ended up in 78^e place – the same level as the previous year, according to WilmerHale’s assessment.

In a September 16 statement, Georgieva said: “I fundamentally disagree with the conclusions and interpretations [of the WilmerHale report]. “

Since then, the IMF’s Executive Board has held various meetings to assess the allegations and what they mean for the institution. After a meeting on Sunday, an IMF spokesperson said: “The Council today made further significant progress in its assessment with a view to concluding its review of the matter very soon.”

Members are expected to meet again on Monday to discuss next steps.

Countries like France, Germany, Italy and the UK would still support Georgieva to lead the institution. However, some officials in the United States are a little more skeptical.

Overall, there are broad questions about the reputation of the IMF going forward.

“As the IMF grapples – intellectually and culturally – with abandoning the so-called ‘Washington consensus’ of budget restraint, since renamed ‘austerity’, and deregulation, it is Managing Director Kristalina Georgieva, who is fighting the serious charges, “Erik Nielsen, group chief economist at UniCredit, said in a note Sunday.

“And amid investigations, it was claimed last week that she recently relied on staff to soften their criticism of environmental policies in Brazil, following the Brazilian government intervention. Unsurprisingly, the The once wonderfully impressive culture of the IMF as an institution is in tatters, ”he added.

The IMF said following a Bloomberg article that the decision to change the language of the report was part of the normal process. A spokesperson also said that “the IMF views climate change as a critical global economic problem and made this point clear with respect to Brazil in the staff report,” according to Bloomberg.

Timothy Ash, senior sovereign emerging markets strategist at Bluebay Asset Management, called the issue a “fundamental crisis of confidence in the IMF.”

“The damage has been done. People are now questioning all the work of the IMF and not just that with some sort of connection to the World Bank’s Doing Business report,” he said in a recent research note. .