IMF board meets chief as part of ethics investigation

THE executive board of the International Monetary Fund met its managing director Kristalina Georgieva on Wednesday as part of its review of an investigation commissioned by the World Bank that is looking into allegations she pressured bank staff to adjust data that determined the ranking of certain countries in an index while she worked there previously.

“The Executive Board remains committed to a thorough, objective and timely review and expects to meet again soon for further discussion,” IMF spokesman Gerry Rice said in a statement.

In 2003, the World Bank launched its Doing Business rankings with the objective of measuring business regulations that enhance or constrain commerce in 190 countries. After data irregularities were reported internally in the 201 and 2020 surveys, World Bank management discontinued the next Doing Business report and initiated a series of reviews and audits of the report and its methodology.

The investigation into the aforementioned surveys is being carried out by law firm WilmerHale. Georgieva became head of the IMF in 2019 as her predecessor Christine Lagarde left to become president of the European Central Bank.

“Because the internal reports raised ethical matters, including the conduct of former Board officials as well as current and or former Bank staff, management reported the allegations to the Bank’s appropriate internal accountability mechanisms,” the World Bank said in September.

“The World Bank Group remains firmly committed to advancing the role of the private sector in development and providing support to governments to design the regulatory environment that supports this. Going forward, we will be working on a new approach to assessing the business and investment climate.”

The US is the largest shareholder of the IMF and officials within the country’s Treasury Department are debating if it should ask Georgieva to resign as a result of the ethics scandal, Bloomberg reported, citing people familiar with the situation.

Georgieva said she disagrees “fundamentally with the findings and interpretations of the investigation of data Irregularities”, while she was at the World Bank.

Last month, The Economist magazine published an editorial in which it called for Georgieva to step down.

“Institutions like the bank suffer from an inherent tension between their diplomatic duties and their scientific aspirations, as Paul Romer, a former chief economist of the bank, has pointed out. Reconciling the two is always difficult. Once the Doing Business rankings became so politically important to the bank’s member countries, it should have brought in outside institutions, like think-tanks or universities, to help oversee them,” The Economist’s editorial said.

“Although Georgieva deserves sympathy, the episode does not sit easily with her present role at the IMF ... the head of the IMF must hold the ring while two of its biggest shareholders, America and China, confront each other in a new era of geopolitical rivalry,” it added.

“The next time the IMF tries to referee a currency dispute, or helps reschedule the debt of a country ... the fund’s critics are sure to cite this investigation to undermine the institution’s credibility.”