World Bank, IMF credibility crisis

All told, the investigators provided sufficient evidence of Georgieva’s involvement to raise serious doubts about Doing Business’s credibility and integrity. The current president of the World Bank, David Malpass, has suspended publication of the 2021 report and discontinued future ones. The Bank will surely examine and amend its procedures to prevent similar efforts at manipulation in the future.

Credibility is essential for the critical work the IMF and World Bank do. Both employ highly respected researchers, world-class economists and statisticians, and dedicated officials. They know they are civil servants and not politicians; all are highly committed to their jobs. True, in some cases (some of which are known to me), there has been pressure at the political level to support a certain lending program or policy position. But a central part of the leadership’s job is to shield staff from undue interference in their reports and analyses.

Attempting to massage the ranking for one country in a cross-country report is egregious not only because it undermines the credibility of the report but also because it harms the other countries whose rankings are changed as a result. When a country falls in the rankings, its ability to attract foreign investors and businesses can be diminished.

Like Caesar’s wife, IMF and World Bank leaders must be well above suspicion in overseeing these institutions’ work and safeguarding the integrity of the data on which that work relies. Georgieva’s reported actions certainly raise serious doubts about her commitment to the integrity of the data, including in the context of her new role.

If an IMF managing director is thought to be amenable to pressures to alter data and analyses, the credibility of the Fund’s work will be greatly diminished, if it is believed at all. It is one thing for the managing director to urge the Board to approve a program of questionable merit based on a report providing an honest account of the situation. It is quite another thing to pressure staff to alter the numbers.

Should Georgieva remain in her position, she and her staff will surely be pressured to alter other countries’ data and rankings. And even if they resist, the reports they produce will be suspect. The entire institution’s work will be devalued. That prospect alone should be enough for the IMF’s political masters to find a new managing director whose commitment to the integrity of the work is not in question.

By Anne Krueger for Project Syndicate

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