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.