Kristalina Georgieva, the director of the International Monetary Fund (IMF), has in recent days been embroiled in a serious scandal that has led to the British weekly Economist, among others, to ask for his resignation. Georgieva, a Bulgarian economist who was also the European Commissioner for Budget, is accused of having contributed to falsifying some data to improve China’s position in an important economic ranking when, between 2017 and 2019, she was director general of the World Bank. .
The World Bank is the leading international organization for development support and poverty reduction, while the International Monetary Fund is tasked with fostering economic cooperation, ensuring financial stability and facilitating international trade. Both are based in Washington.
The ranking involved in the scandal is called Doing Business, and until last year, when its publication was dropped, it assessed each year how attractive the states were for investments and for the formation of new businesses. It was an extremely important ranking, used by governments around the world to make relevant macroeconomic decisions and by entrepreneurs and international entities to evaluate their investments.
The World Bank itself, over the past decade, has used the Doing Business ranking as a valuation criterion in 676 of its projects, which have led to international investments worth over $ 15 billion.
Recently independent research conducted by a group of lawyers but commissioned by the World Bank concluded that in 2017 Georgieva and others worked to make China’s ranking gain several positions, after Chinese government officials complained to the Bank’s management, and at a time when the institution was seeking a capital increase from some of its shareholders, including China itself.
In the 2018 Doing Business ranking, which was in preparation at that time, China should have been in 85th position, but Georgieva had several parameters changed to improve the ranking by seven places. In this way, however, the parameters of the entire search were distorted.
Georgieva in recent days has denied all accusations: «I’ll be clear: the conclusions [della ricerca che l’accusa ndr] they are wrong. I have not pressured anyone to change any reports, ”he said.
As noted also theEconomist, at the time of the scandal Georgieva was the second in command of the World Bank: the president was Jim Yong Kim, and it was he who gave the order to comply with the complaints of the Chinese government. The weekly also argues that Georgieva may have changed the ranking not for some personal return, but because China was actually making major reforms at the time to make her country more welcoming to entrepreneurs. Georgieva’s intent was to strengthen “multilateralism”, that is, China’s integration into the international financial system.
Despite this, now that Georgieva is president of the International Monetary Fund, the World Bank scandal is a rather serious problem, according to the Economist. First of all, because the IMF also has an important and influential economic research department, and manages some of the most important macroeconomic statistics on the growth and development prospects of all countries in the world – and if the director of the Fund is accused of having falsified important data, the credibility of the Fund is threatened.
Second, because the IMF is at the center of a major dispute between the US and China and will have to make important decisions on various economic and trade issues that divide the two countries. According to theEconomist, the Fund cannot afford to have a director who has in the past been accused of being complacent towards one of the two countries.