Kristalina Georgieva’s future will be resolved in a matter of days. After questioning the managing director herself and the lawyers who have investigated alleged malpractices when she was in charge of the World Bank, the executive committee of the International Monetary Fund (IMF) has announced in the early hours of this Saturday that it will make a decision “very soon” about its continuity. The WilmerHale law firm’s audit revealed in mid-September an alleged favorable treatment to China in the World Bank’s star report, the ranking of countries Doing Business. According to the investigations, Georgieva, whose future depends largely on what the United States decides, would have “unduly” pressured officials who depended on her for the Asian giant to climb positions in a classification that orders countries by the facilities they grant to do business.
In the note published this Saturday (European time), the IMF reports “significant progress” in the process after having interviewed both parties, although it remarks that it will ask for “new clarifying details” before making a final decision. Reading between the lines, this statement is not good news for Georgieva: had it discarded the signs of malpractice targeted by the audit, the Fund would have closed the matter outright. But that has not been the case. “The executive committee remains committed to a thorough, objective and timely review,” adds the letter, repeating a formula that has been a constant since the World Bank published the results of the investigation commissioned by the organization itself to shed light on the matter.
WilmerHale’s research concludes that the 2018 edition of the Doing Business China should have been seven places below the position it finally held: without the alleged pressure it would have ranked 85th out of 190 countries instead of 78th. This artificial improvement in its results occurred in the fall of 2017, just when the agency needed the acquiescence – and the money – of the second world power to expand capital, such as it ended up happening in April of the following year. When these allegations came to light three weeks ago, the World Bank made the decision to cancel future editions of this once influential report.
Georgieva, for her part, has denied the accusations, which she has described as “false and spurious”. “I have answered all the questions that have been put to me and I remain at the disposal of the executive committee as it advances to conclude its discussions as soon as possible,” she said in a statement after being questioned by the organization that she herself directs. Next week, both the Fund and the World Bank celebrate their traditional annual meeting, to which in 2021 both institutions arrive very touched in terms of reputation.
USA, key
In a climate of permanent economic confrontation between the US – the IMF’s largest shareholder, which gives it 16.5% of the voting rights – and China – the third largest shareholder, with just over 6% of the voting rights -, the ball is now in the court of the countries.
The European bloc, the continent from which all the managing directors that the organization has had since its foundation have originated, supported Georgieva without fissures when she made the leap from the World Bank to the Fund in October 2019 and seems to opt for its continuity. The Bulgarian economist has extensive experience in Brussels, where she was a commissioner for six years and earned the respect of governments and senior officials.
However, given that the five largest economies in the EU (Germany, France, Italy, Spain and the Netherlands) account for just over 16% of capital, much of what happens to their future will depend on what Washington and Tokyo decide. —Japan is the second largest shareholder, with a slightly higher share of power than Beijing — and of the alliances that they can forge with other major partners such as the United Kingdom, Russia, India, Canada or Brazil.