Georgieva remains at the head of the IMF – and yet in the end all the losers are – the economy

Kristalina Georgiewa remains in office, the leadership crisis at the International Monetary Fund (IMF) is over, the governing bodies have “full confidence” in the boss. If you didn’t know better, you should have assumed that Tuesday’s IMF announcement was satire, a nasty little piece of advice. Because if the 190 member states of the fund have only one thing left in Georgieva after weeks of suspicion, then he is full of confidence. The allegations against the 68-year-old woman, who was allegedly involved in manipulating data in favor of China during her tenure as managing director of the World Bank, are too serious.

Still, it was right to hold on to Georgieva. Because there were indications that she was involved in the alleged deal in which the People’s Republic accepted the long-awaited increase in the registered capital of the World Bank and was portrayed in an overly positive manner in the Doing Business report. of the institution. But there was no solid evidence. In addition, the IMF boss vehemently denies any allegations that a law firm has leveled against her. Finally, there was testimony against testimony, that is to say: in case of doubt, for the accused.

If the IMF was suspected of being commercially viable, it could cease to function

Nothing is finished, however, as the week-long row has damaged the reputation of the IMF and the World Bank, but especially that of the historic fund manager – perhaps even irreparably. Correct economic analysis, the purely factual and absolutely incorruptible preparation of economic reports and forecasts are among the essential tasks of sister institutions. Official development assistance payments, private investment and even the fate of governments depend on data. If the IMF was even suspected of being marketed here or even ready to do business, it might stop functioning.

It also weighs heavily that the United States, of all peoples, the largest shareholder in power, has urged Georgievas to be kicked out. How should this close and intensive cooperation between the head of the IMF and the US government be possible in the future, without which the fund would be practically paralyzed? Such a paralysis would be devastating, especially in times of global health crisis, because even if you don’t notice it in the wealthy West: In much of the world, it’s more or less just the IMF and the World Bank that governments in the fight against the pandemic and its economic support for indirect damage.

Maybe the US was just trying to distract from Kim’s responsibility

But the dispute has also hurt the United States and the Europeans, who have fought jealously for influence at the IMF and World Bank for decades. We note, for example, that the USA immediately declared Georgieva guilty of the affair, while the name of Jim Yong Kim hardly appeared. There are also indications that the manipulations could have been hatched in the office of US citizen Kim, who, as then president of the World Bank, was the Bulgarian woman’s boss. And maybe the United States is also annoyed that Georgieva opened up the fund even more to developing countries during the pandemic, putting the World Bank, along with current US President David Malpass, in the shadows.

On the other hand, the support of the Europeans for the patron of the IMF is nourished less by total confidence and an appreciation for her overall good work with the fund, but more out of necessity: the EU states had no not only put Georgieva in power in 2019, they On the contrary, if you are evicted, you must fear losing your customary law once and for all, according to which the fund is still managed by a European.

Either way, the fact remains: a highly political deal with China, as it likely happened at the World Bank, is not engineered by petty officials. On the contrary, it is very likely that Kim or Georgieva’s office knows about it – or even the bosses personally. In this regard, the decision to keep the head of the IMF in office is nothing more than a second-rate acquittal. In other words: an acquittal full of suspicion.

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