The International Monetary Fund and World Bank hold their annual meetings in Washington this week with the credibility of the two Bretton Woods institutions once again in question.
As meetings begin today, a political pall hangs over the proceedings as IMF Chief Kristalina Georgieva fights for her position amid allegations that she personally interfered—to China’s benefit—regarding an influential business ranking when she was the No.2 at the World Bank in 2017.
The issue centers around a recently published investigation from law firm WilmerHale which found that Georgieva improperly influenced her subordinates to prevent China dropping further on the World Bank’s annual “Doing Business” rankings.
Georgieva “fundamentally” disagrees with the conclusions made in the report and reportedly met late into Sunday night with the IMF’s executive board to defend her position.
The episode has provoked siu among the powers behind the IMF. According to the Financial Times, the United States and Japan want Georgieva to go (Treasury Secretary Janet Yellen has reportedly stopped taking Georgieva’s calls), while Europe’s strongest powers, along with Russia and China and much of the developing world, want her to stay.
The wrangling over Georgieva’s future reflects the larger debate over how much power the United States is willing to let China wield in institutions that have U.S. primacy baked in from their inception. (The United States currently has almost three times the voting power of China at the IMF, for example).
As Ed Luce writes in the Financial Times, “it takes little imagination to picture China losing interest in bodies such as the IMF if it does not receive its due as one of the world’s two great powers.” A Chinese departure would also risk losing out on “key tools for engaging China in an increasingly bifurcated world,” Luce adds.
Breaking up the club. One way to ease the evolution of the Cold War institutions could be to break the U.S.-Europe duopoly on the top positions at the IMF and World Bank. As Devesh Kapur and Arvind Subramanian write in the Indian Express, meritocratic choices for the top jobs could provide both a clean slate and more effective messengers: “These heads often go around the developing world, preaching the virtues of good governance, from arguing against the scourge of corruption to improving data integrity … How credible can such policy messages be if their carriers are themselves compromised?”
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Global growth stumbles. Aside from palace intrigue there is the small matter of the world’s economy. On Tuesday, the IMF is expected to estimate slightly lower economic growth in 2021 than the 6 percent it forecast in June. The reduction is based in part on the uneven growth trajectories of wealthy countries and their poorer counterparts.
Speaking last week, Georgieva said most advanced economies would return to pre-pandemic levels by 2022 while emerging economies would take “many more years” to recover.
Masood Ahmed, the president of the Center for Global Development, summarized the business that can still get done this week, despite the distractions.
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