IMF Managing Director Kristalina Georgieva.
Samuel Corum | Getty Images
Kristalina Georgieva, managing director of the International Monetary Fund, is under pressure after allegations that she told staff at the World Bank to amend a rankings to China’s benefit.
Georgieva denies the claims. But the scandal is forming a shadow over the IMF and World Bank’s annual meetings, which take place this week from Washington, D.C.
CNBC takes a look at the claims, and what the IMF is doing about it.
Where did the allegations come from?
Georgieva served as chief executive of the World Bank from 2017, before joining the IMF in late 2019.
A report, prepared by the law firm WilmerHale and requested by the bank’s ethics committee, published in September said that during her time at the World Bank, “Georgieva became directly involved in efforts to improve China’s ranking [in the Doing Business Report].”
The “Doing Business” rankings are a flagship piece of annual research from the World Bank that assesses how friendly a nation is to do business in.
In the 2018 report, China was initially ranked 85, but after influence from within the leadership team and interventions from Beijing; the country ended up in 78th place — the same level as the year before, according to the WilmerHale assessment.
In a statement on Sept. 16, Georgieva said, “I disagree fundamentally with the findings and interpretations [of the WilmerHale report].”
Since then, the IMF’s executive board has had different meetings to assess the allegations and what they mean for the institution. After a meeting Sunday, a spokesperson for the IMF said, “The Board made further significant progress today in its assessment with a view to very soon concluding its consideration of the matter.”
Members are expected to gather again on Monday to discuss next steps.
Countries such as France, Germany, Italy and the U.K. are reportedly still backing Georgieva to lead the institution. However, some officials in the United States are a little more skeptical.
All in all, there are broad questions about the reputation of the IMF going forward.
What are people saying about it?
Erik Nielsen, a group chief economist at UniCredit, said that the “serious accusations” surrounding Georgieva come as the IMF is dealing — both intellectually and culturally — with a shift away from the so-called Washington Consensus of austerity.
“And in the middle of the investigations, it was claimed this past week that she more recently leaned on IMF staff to soften their criticism of environmental policies in Brazil, following intervention from the Brazilian government. Not surprisingly, the once wonderfully impressive culture of the IMF as an institution lies in tatters,” he said in a research note Sunday.
The IMF said in the wake of a Bloomberg article that the decision to alter the language of the report was part of the normal process. A spokesperson also said that “the IMF considers climate change a globally critical economic issue and made that point with regards to Brazil very clearly in the staff report,” according to Bloomberg.
Timothy Ash, an emerging markets senior sovereign 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 the IMF does and not just that with some kind of tie to the World Bank Doing Business report,” he said in a recent research note.