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Georgieva defended by Ex-World Bank official

A former World Bank official who prepared reports at the center of a data-rigging scandal defended IMF chief Kristalina Georgieva. Because, the Economist magazine called for her to resign over her alleged role in the controversy. Shanta Devarajan had helped to oversee the World Bank‘s “Doing Business” report in 2017. He said that an outside investigation report alleged that Georgieva, during her time as World Bank CEO, applied undue pressure on staff to boost China’s ratings was beyond credulity.

Devarajan is now a Georgetown University professor of development policy. He tweeted that he never felt any pressure to change China’s scores and said that WilmerHale lawyers used only half of his statements. Georgieva’s direction was to verify the China numbers to make sure that China received credit for the reforms they undertook. And that too without compromising the integrity of Doing Business. The latter phrase was left out by the bank’s lawyers, according to him. And the rush to judgment on Georgieva is misguided.

His tweets came after a scathing editorial from the Economist, an influential magazine in policy circles. He said that Georgieva should resign, as the incident has undermined the IMF’s credibility. The Economist said that the head of the IMF must hold the ring while two of its biggest shareholders, America and China, confront each other. He added that critics of multilateralism are already citing the findings. The editorial said that next time the IMF tries to referee a currency dispute. The fund’s critics are sure to cite this investigation.

Georgieva is a Bulgarian and a former World Bank economist and European Commission official. She has denied the accusations in the WilmerHale report. She has personally retained a public relations firm, SKDK, to push back against the allegations. Joseph Stiglitz, a former World Bank chief economist, also called the WilmerHale report a hatchet job. Doing Business staff told him that they did not feel pressure from Georgieva in 2017. Stiglitz didn’t mention current president David Malpass when data irregularities involving Saudi Arabia’s rating occurred under his leadership, because the fingerprints aren’t there. The report found no evidence suggesting that the Office of the President is involved. Republicans in the U.S. Congress have stopped short of calling for her to be ousted. Three Republican House of Representatives members sent a letter to U.S. Treasury Secretary Janet Yellen. This is for a request that she report the Treasury review to Congress, including information on Georgieva’s interactions with Chinese IMF officials in the decision-making process for August’s $650 billion allocation of IMF monetary reserves known as Special Drawing Rights.

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Finance

Euro zone ministers expect inflation to slow in 2022

The acceleration of euro zone inflation, driven energy prices, is mostly temporary. Then the price growth will slow down again. The euro zone finance ministers agreed that, that too the next year as forecasted by the European Central Bank and the European Commission.

Paschal Donohoe, chaired the talks of the ministers in Luxembourg. In a news conference he said that there was also agreement that the inflation spike was not an argument against the transition to renewable sources of energy. This is under the EU’s ambitious plan of reducing CO2 emissions to zero by the year 2050.

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Under new rules, borrowing for investment sensible

British finance minister Rishi Sunak said that the government borrowing to fund investment was a sensible thing. This is to allow under new fiscal rules that he is likely to announce, unlike borrowing for day-to-day spending. He said that borrowing for capital investment that is going to drive up their growth is probably a sensible thing for them. And that too particularly in an environment of slightly lower interest rate. Sunak stated this in an event on the sidelines of the annual conference of Britain’s ruling Conservative Party. This event was organized by the Taxpayers’ Alliance advocacy group. Sunak stated in that event, that borrowing for more day-to-day spending is probably less something that you would want to have as part of your framework.

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IMF board to interview Georgieva-sources

The International Monetary Fund’s executive board is going to interview Managing Director Kristalina Georgieva. This is regarding that; its reviews claims that she pressured World Bank staff to alter data to favor China in her previous role. Board members were initially expected to meet with Georgieva. But spent their time working on other regular business matters.

The board members spent hours for questioning lawyers from the WilmerHale firm. This is about their World Bank investigation report which alleged that Georgieva, as the bank‘s CEO applied undue pressure on staff, to alter data in the flagship “Doing Business” report to benefit China. Then, an IMF spokesperson said that the IMF board remains committed to a thorough, objective, and timely review of the matter. Georgieva has strongly denied the accusations.

The upcoming interviews could prove pivotal in either increasing support for Georgieva. This is with many IMF shareholders are keen to wrap up the board’s deliberations on the matter. The fund’s most influential member governments, including the top shareholder the United States, have withheld public judgment. The World Bank tasked WilmerHale with investigating the “Doing Business” data irregularities identified in 2020. The law firm’s report contends Georgieva. The former World Bank President Jim Yong Kim’s office pressured staff to manipulate data so that the China’s global ranking in the “Doing Business 2018” study of investment climates rose to 78th from 85th.

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