IMF chief Kristalina Georgieva is under growing pressure from staff, US lawmakers and economists as she battles allegations that she pressured subordinates to favour China while in a previous role at the World Bank.
Five staff members in managerial and operational positions told the Financial Times that they and their colleagues were concerned the scandal might compromise IMF work.
Three US Republican lawmakers have also written to US Treasury secretary Janet Yellen asking her to investigate the matter, which they said “raises serious questions about . . . Georgieva’s ability to lead” the IMF.
Georgieva used a scheduled IMF staff meeting last week to deny allegations contained in an independent report that while World Bank chief executive she manipulated its “Doing Business” report on countries’ business climates, flattering China’s ranking.
“[Let] me put it very simply to you. Not true,” she told staff. “Neither in this case, nor before or after, have [I] put pressure on staff to manipulate data.” On Thursday, Georgieva followed up with a brief missive to further try and assuage staff concerns.
But IMF staffers who requested anonymity told the FT that Georgieva’s denials of the report’s findings at the town hall meeting had left them and colleagues dismayed.
“Not just me, other people as well, felt this was wholly inappropriate,” said one manager. “This is a highly dubious and highly concerning situation,” the person added, because nobody can be sure the IMF is not taking “directions from one or other country . . . Everybody says this stinks to high heaven.”
The allegations against Georgieva, contained in a report commissioned by the World Bank and since referred to the IMF’s executive board, are the biggest threat yet to her two-year tenure at the IMF. They also jeopardise the fund’s reputation for scrupulous data, which informs a myriad of economic and financial decisions by the IMF and other lenders.
Erik Nielsen, group chief economist at UniCredit and a former IMF and World Bank economist, said the allegations came just as the fund was struggling to reconcile an internal policy conflict between austerity and expansionary public spending.
“In the middle of a cultural crisis, you get this news — it’s very bad, it’s throwing fuel on the fire,” he said. “But at the end of the day, you don’t cook numbers and if you do, you have no role in policymaking.”
Ultimately, Georgieva’s fate as head of the IMF rests on whether its major shareholders — including the US, European countries and Japan — believe she should remain in the job.
Georgieva has won praise from economists such as Joe Stiglitz for her handling of the pandemic, and her progressive views on climate change and debt.
“She was changing the institution, and I think in a good way . . . other people like to keep the old fund,” Stiglitz said in an interview, after sending a letter to the IMF board in her defence. “Her services are needed now more than ever,” he wrote.
Still, unease about the scandal, which one staffer said had “severely impacted” their jobs, adds to the pressure on Georgieva after last week’s release of the report prepared by law firm WilmerHale at the request of the World Bank’s board.
Three Republican lawmakers on the US House of Representatives financial services committee on Wednesday wrote to Yellen and called for the Treasury department to report to Congress within 30 days on the extent that China may now be influencing the IMF under Georgieva.
“Everyone I’ve talked to is pretty shocked,” an IMF staffer said. “Everybody is unhappy.”
Georgieva took another stab at addressing the concerns on Thursday. “There are many questions raised by the report that I will address as the Board goes through its review process,” she wrote in a note to staff.
“So far I have refrained from commenting out of respect for the Board’s role. I hope soon to be able to present in detail my reflections and answers to all questions people may have,” she added, before giving thanks for “many messages of support from you.”
The WilmerHale report was based on three dozen interviews with current and former World Bank staff and a review of 80,000 internal documents.
Georgieva was World Bank chief executive at the time, before she became its acting president. She was appointed IMF managing director in 2019 and has led the organisation through the pandemic.
The report accuses Georgieva of directing Simeon Djankov — a fellow Bulgarian who also worked at the World Bank and was later promoted to head its development economics department — to push up China’s rankings in the 2018 Doing Business report, which was cancelled last week amid the furore.
At the time, Georgieva was working alongside bank president Jim Yong Kim to persuade China and other countries to contribute more capital to the World Bank. Djankov did not respond to requests for comment.
Former World Bank staffers who were close to the situation have provided contrasting views.
In a note sent to the IMF board, Shantayanan Devarajan, a former senior World Bank official, denied that Georgieva had put pressure on him to manipulate country rankings to benefit China.
Devarajan, who was later replaced by Djankov, said Georgieva “asked the team and me to check, double check and triple check the data underlying China’s score” but only with an eye to ensuring the research was “accurate and credible.”
“She emphasised that she wanted us to be as thorough as possible without compromising the integrity of Doing Business,” Devarajan wrote to the board, according to an excerpt seen by the FT. On Thursday, he said Georgieva was the victim of a “rush to judgment”, in the first of a series of tweets on the allegations.
However, Paul Romer, who resigned as World Bank chief economist in 2018 after he went public with earlier concerns about the Doing Business rankings, has claimed Georgieva “engineered a cover, a whitewash” about their methodology.
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