When the cold war blows on the IMF
Kristalina Georgieva, the leader of the International Monetary Fund was reconfirmed yesterday in her post despite suspicions of irregularities. She was accused of data manipulation in favor of China during her previous post at the World Bank. «Unfounded» facts, according to her.
Doing Business is also used as a benchmark for establishing the rates at which states can borrow.
This shows the importance of this publication, and we can easily imagine the anger of France, a few years ago, when it was overtaken by Jamaica, because of the rating system used.
Because the countries which obtain the best marks, and therefore the best rank are those which apply the reforms recommended by the IMF, the ranking goes down for those which maintain for example too many subsidies or social shock absorbers.
An ultra-liberal policy
And for good reason, the United States is the first contributor to the World Bank, followed by Japan. However, in this year 2018, the funds of the World Bank are not flourishing, and the institution would like China, the second-largest economy in the world, to increase its quota within the institution.
Problem: the indicators are not favorable to it. A sudden change of calculation then allows Beijing to gain 7 places, going from the 85th to the 78th. A change in data processing that would have been driven under pressure from Kristalina Georgieva, assure her detractors …
But in 2018, Donald Trump is at the head of the United States. The economic war between Washington and Beijing is raging. In this context, this positive ranking of China strongly displeases the White House.
The World Bank’s ethics committee then decides on an investigation, entrusted to an American law firm. These are the conclusions of this survey which were analyzed yesterday by the IMF, of which, in the meantime, Kristalina Georgieva has become the president.
The IMF is the other major global financial institution, also emerging from the Bretton Woods conference, which in 1944 laid the foundations for the post-war world economy.
A disturbing profile
Since that time, traditionally, the World Bank has been run by an American and the IMF by a European. In this case, a European, Kristalina Georgieva having succeeded Christine Lagarde.
Seeing Kristalina Georgieva appointed to this post after the controversy over the Doing Business report was not to everyone’s liking.
Especially since his profile made Washington tick. Think about it. A Bulgarian, born in the Eastern bloc, who worked in Russia, and who comes from an emerging country: in short, not really in the nails …
Renowned economist, supported by the European Union and Africa, she has nevertheless already marked the IMF by its action, in particular in favor of the environment.
It intends to make it a pioneer in the fight against climate change. In the context of Covid, she was also able to convince member countries to increase IMF reserves to help the most vulnerable countries in the face of the pandemic.
The accusations against her tore the IMF apart, which nevertheless ended up concluding yesterday that there was no conclusive evidence on its guilt, despite the reluctance of the US Treasury and Japan, which intend to closely supervise its action.
For the Nobel laureate in economics Joseph Stiglitz, one of her main supporters, Kristalina Georgieva was the victim of a cabal that smacks of McCarthyism, a good old return to the witch hunt.