IMF boss has new reason to push ambitious agenda
International Monetary Fund boss Kristalina Georgieva has ridden out data-rigging allegations. Now she has got a lot to prove. Keeping the job isn’t enough for any ambitious leader with an eye on legacy. The IMF’s executive board late on Monday expressed its confidence in the Bulgarian economist after a multi-meeting review of allegations that she pressured World Bank staff, when she worked there, to alter data to favour China. Georgieva welcomed the endorsement. The most pressing challenge is to restore trust.
The IMF doles out specific policy advice to countries and normally attaches conditions to its financial help. There can be no hint of grace or favour to some countries when others are being prescribed bitter medicine. Also, Georgieva needs governments to view her as an honest broker if she is to secure compromises on big goals like fighting inequality and climate change.
Before the allegations emerged, she had won plaudits for the IMF’s agile and flexible response to the pandemic’s devastating economic consequences and for her role in securing a new $650 billion allocation of Special Drawing Rights, the IMF’s quasi-currency. There’s plenty more to do and the desire to be remembered for more than this episode will be an extra incentive to push ahead on a few fronts.
First, she needs to mobilise financing for a green and inclusive economic recovery. This means ensuring the poorest are neither disproportionately saddled with the cost of decarbonisation nor left to cope on their own with the consequences of climate change, like drought and flooding. Mark Carney, the United Nations climate envoy, in a Breakingviews podcast today said the IMF and other multilateral lenders need to “up their ambition” in helping provide funds for climate-related projects, a view espoused earlier this year by Larry Fink, whose BlackRock oversees $9 trillion of private capital.
Second, continue progress made by the IMF in ditching cookie-cutter policy prescriptions, like austerity, or an overweening faith in free markets. Third, lay the groundwork for an overhaul of the IMF itself. China’s economic rise will be the source of increasing tensions in an institution where the United States is the largest shareholder and Europeans have traditionally held the top job. Countries, not Georgieva, decide how to revise voting rights. She can help matters by improving transparency and rebuilding trust during the rest of her tenure – thereby moving her own legacy beyond the whiff of scandal.
Source: Reuters (Reporting by Swaha Pattanaik; Editing by Rob Cox, Oliver Taslic and Karen Kwok)