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Business

Allegations of favoring China could erode confidence in IMF chief

Agence France-Presse
Allegations of favoring China could erode confidence in IMF chief
In this file photo taken on May 18, 2021, International Monetary Fund Managing Director Kristalina Georgieva speaks during a joint press conference at the end of the Summit on the Financing of African Economies in Paris. Georgieva on September 16, 2021, disputed an independent investigation which found that in her previous job at the World Bank, she pressed staff to alter a report to avoid angering China. The World Bank announced Thursday that it was immediately discontinuing its Doing Business report after the investigation found irregularities in the 2018 and 2020 editions.
AFP / Ludovic Marin / Pool

WASHINGTON, United States — 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 present 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 during her time as World Bank CEO, Georgieva 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.

Georgieva was appointed IMF managing director in 2019, and the lender's member countries will "have to make a decision about whether they're comfortable with, with her continuing in that role," Nobel laureate Paul Romer said in an interview.

"I think they should think about their options."

Georgieva disputed the probe's findings, and on Friday told IMF staff the charges were "not true."

"Neither in this case nor before or after have I put pressure on staff to manipulate data. I would ask staff to please check, double-check, triple-check, but never change, never manipulate what the data tells us," she said according to The New York Times, which obtained a transcript of her remarks. 

She said she believes "strongly in the value of credible data and analysis that leads to policy recommendations for the benefit of our members."

Romer, who was World Bank chief economist during Georgieva's time there, criticized her for engineering what he described to AFP as 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 'reviewing'

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."

The World Bank board commissioned the investigation by law firm WilmerHale, which examined tens of thousands of documents and interviewed more than three dozen current and former staff.

A spokesperson said the IMF board, which was scheduled to meet Friday, "is currently reviewing this matter," without providing further details.

Republican lawmakers already have raised questions about Georgieva's conduct.

House 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 increasing the bank's lending capital.

Justin Sandefur of the Center for Global Development had written extensively about the problems with the methodology in the World Bank rankings, which he said "made it ripe for this sort of interference and manipulation."

"For the head of the IMF to have been involved in data manipulation is a pretty damning allegation," he told AFP. "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."

Andy Barr, a fellow Republican House lawmaker, called on Treasury to investigate the "bombshell findings," saying, "Georgieva's involvement with data manipulation for China's benefit is alarming."

Her leadership of the IMF calls into question other dealings with Beijing and "has implications for China's influence at the Fund," Barr said.

INTERNATIONAL MONETARY FUND WORLD BANK
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