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Georgieva remains the head of the International Monetary Fund - yet in the end all losers are the economy

Georgieva remains the head of the International Monetary Fund – yet in the end all losers are the economy

Kristalina Jorgoa is still in office, the leadership crisis in the International Monetary Fund (IMF) is over, and the higher bodies have “full confidence” in his boss. If you didn’t know too well, you have to assume that the IMF’s announcement on Tuesday was sarcastic, which is bad little advice. Because if the Fund’s 190 member states no longer have one thing in Georgieva after weeks of doubt, it’s full of confidence. The allegations against the 68-year-old, who was said to have been involved in data manipulation in favor of China during her tenure as CEO of the World Bank, are very serious.

However, it was right to stick to Georgieva. Because there were indications of its involvement in the alleged deal in which the People’s Republic of China approved the long-awaited capital increase of the World Bank and was presented in a very positive way in the institution’s famous Doing Business report. But there was no solid evidence. In addition, the head of the International Monetary Fund vehemently denies all the allegations made against her by a law firm. At the end there was an anti-testimony, meaning: for the accused in doubt.

If the IMF suspects that it can continue commercially, it may stop operating

However, nothing ended because the week-long dispute damaged the reputation of the IMF and the World Bank, but above all damaged the reputation of the current fund manager – perhaps even beyond repair. Among the primary tasks of sister institutions is correct economic analysis, preparation of economic reports and forecasts based on pure facts and completely incorruptible. Government development aid payments, private investment, and even the fate of governments depend on data. If the IMF suspects it is trading here or is even willing to do business – it may stop working.

It also weighs heavily that the United States, of all persons, the greatest contributor to power, urged Georgievas to expel him. How can such close and intense cooperation between the head of the International Monetary Fund and the US government be possible in the future, without which the Fund will be practically paralyzed? Such paralysis would be devastating, especially in times of global health crises, because even if you did not notice it in the rich West: in large parts of the world, only the IMF and the World Bank are in charge of governments. In the fight against the epidemic and the consequent economic support for the damage.

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

But the conflict has also hurt the USA and the Europeans, who have been jealously wrestling for influence in the International Monetary Fund and the World Bank for decades. It is very noticeable, for example, that the United States declared Georgieva guilty in this case from the very beginning, while the name of Jim Yong Kim appeared only with difficulty. There are also indications that the manipulation could have taken place in the office of American citizen Kim, who, as then head of the World Bank, was the head of the Bulgarian woman. The US may also be upset that Georgieva has opened the fund more to developing countries during the pandemic, putting the World Bank, with its current US president, David Malpass, in the shadows.

On the other hand, the Europeans’ support for the head of the International Monetary Fund is fueled less by complete confidence and appreciation for her overall good work with the Fund, but more than by necessity: not only did the EU countries appoint Georgieva to her posts in 2019, it would have been better, if Expelled, they also have to fear losing their customary law once and for all, according to which the fund has always been run by a European.

Either way, the fact remains: a very political deal with China, as has likely happened at the World Bank, is not being designed by junior officials. On the contrary, it is very likely that either Kim’s office or Georgieva knew about this – or even the bosses personally. In this regard, the decision to keep the head of the International Monetary Fund in office is nothing more than an acquittal of the second degree. In other words: an acquittal filled with suspicion.