FINANCE

Europe leans towards US for formula as Georgia IMF maintains future balance


France plans to support Kristalina Georgieva when the 24 board members of the IMF meet on Friday to assess whether the fund’s managing director should be retained after allegations that the World Bank challenged her ethics in her previous job.

But on Thursday it was unclear whether Paris’ support would help other European countries resolve a dispute that has hung over multilateral donors for the past three weeks and threatened to start the IMF and World Bank’s annual Washington DC conference. On monday.

According to people familiar with the board’s discussions, several EU countries and the United Kingdom were waiting for any indication from the Biden administration on whether Georgia had lost US support.

“The board took five hours (Wednesday) and did not give a clear direction to show you how divided they are on this issue,” said a former senior IMF official. “To do things with the managing director, they try to get as close to a sens minimal as possible. . . I’m sure they want to put it behind them before next week, but it seems very difficult.

Georgiev has been accused of manipulating data on behalf of China in the 2018 edition of the World Bank’s widely followed annual Doing Business Report, when he was the bank’s CEO, leaving the top post at the IMF in October 2019. He denied wrongdoing and denied the allegations, a line of defense he repeated to the board on Wednesday.

The allegations were made in a report commissioned by the World Bank’s board of law firm Wilmerhall, which met with the IMF board on Monday.

The bank’s board decided to release the report on September 1, just hours after the bank said it would close the Doing Business report because of ethical concerns about the conduct of former and servicing board officials and employees involved in its preparation.

In addition to Paris, Hungary’s finance minister also spoke in favor of Georgieva this month, saying “there is a political background to the attack which has no place in the international financial institution”. Last weekend, a public relations firm maintained by Georgia issued a statement in support of the finance ministers of 16 African countries.

Asked about the matter over the weekend, German Finance Ministry spokeswoman Christina Wagatzki said: “The IMF is currently consulting. As you know, Mrs. Georgieva is the current head of the IMF and in this position she has the opportunity to make a statement. Germany will not empty it in advance. ”

A key question hanging in the EU capital is where Joe Biden and U.S. Treasury Secretary Janet Yellen stand. Washington has the most influence in the IMF, with 16.5 percent of U.S. voting rights in the fund.

“There are a lot of people sitting on the fence until the Americans take a stand,” said one person familiar with the discussion.

On Wednesday, a Treasury Department spokesman declined to say whether the United States had backed the IMF’s Georgieva leadership after this week’s board meeting, noting that the Treasury had pressed for a “thorough and accurate accounting of all events.”

The Treasury declined to comment further Thursday.

A source close to the fund said the IMF aims to resolve the issue at the board level before the fund’s annual meeting next week. But a former IMF official said it could be a difficult ambition to meet.

Georgia’s departure will create a political headache in Europe, which has always claimed this position – while the Washington traditionally appoints the head of the World Bank.

The Bulgarian economist replaced Christine Lagarde two years ago after a fierce battle between European capitals. For his appointment, the IMF has to abolish the age limit specified in the funding rules for the post.

But if he stays, the credibility of the fund will be “greatly diminished”, warned Anne Kruiger, the former first deputy managing director of the IMF.

“The work of the entire organization will be devalued. There should be a possibility for the IMF’s political executives to find a new managing director whose commitment to the integrity of his work is unquestionable, “he wrote to Project Syndicate on Thursday.

Additional report from Victor Mallett of Paris



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