The Washington-based World Bank, which has long presented itself as the foremost multilateral development agency, announced last week that it was discontinuing Doing Business, an annual report that for the past 18 years graded and ranked countries according to whether their regulatory or tax regimes were sufficiently pro-business.
This flagship report proffered policy advice generally consisting of weakening or eliminating regulations or procedures that put costs or obligations on private business, including corporate taxes or contributions to workers’ pensions or healthcare. Both the Bank and the International Monetary Fund have used the report’s indicators to pressure countries to reduce regulations, sometimes through loan conditions.
Not surprisingly, over almost two decades of existence DB provoked strong criticism from organizations advocating improved social protection and fairer taxes, groups calling for more equitable development policies in low-income countries, and the global labor movement. The World Bank early in the last decade made a concession to those opposed to the Bank’s advocacy of lower minimum wages and reduced protection for workers by suspending and more recently eliminating the DB indicator that called for weakened labor regulations.
But with the growing intensity of the movement in favor of policies that more fairly distribute wealth and income, there has been a ratcheting-up of opposition to DB in light of the Bank’s obstinate refusal to, for example, get rid of the report’s tax indicator, which routinely gave its best performer scores to tax havens and oil states. Through Doing Business the World Bank placed itself in overt opposition to a recent international agreement calling for higher taxes on corporate profits.
It was not DB’s unpopular right-wing agenda that finally led the World Bank to pull the plug on its most high-profile report, but rather the Bank’s revelation last week that officials at the highest level had connived to alter DB’s findings in attempts to please governments of some powerful and rich countries. Those implicated include the current head of the Bank’s sister institution, the IMF, Kristalina Georgieva, for acts that occurred in 2017-2019 when she was the Bank’s chief executive (a position that was eliminated when she left the Bank).
The incidents described in the Bank’s investigative report include an elaborate operation, led by Georgieva, to change data and improve the results for China in the DB 2018 report, the drafting of which coincided with negotiations to increase the World Bank’s capital base. The Bank was counting on a substantial financial contribution from China as a result of these negotiations.
A later incident related in the Bank’s investigation concerned an official named Simeon Djankov, a Bulgarian compatriot of Georgieva’s who happened to be a founder of DB whom she brought in to authorize changes to the report and subsequently promoted to be head of the Bank’s large economics department. In January 2019 Djankov travelled to Saudi Arabia where he delivered a speech promising that the country “would see significant gains in its Doing Business performance” as a result of having paid the Bank substantial fees to deliver so-called Reimbursable Advisory Services. In September of that year DB staff did in fact alter data to improve Saudi Arabia’s score in DB 2020 as instructed by Djankov, according to the Bank’s investigation.
Continued next page
(154 VIEWS)
