Compass Money: The IMF Moves to Retain its Managing Director

The IMF Board reaffirmed their faith in Managing Director Kristalina Georgieva after allegations of misconduct in a prior position. (Flickr)

The board of the International Monetary Fund (IMF) reaffirmed its confidence in the leadership of Managing Director Kristalina Georgieva on October 11. A third party law firm accused Georgieva in September of influencing an economic development report in favor of China in her preceding position as CEO of the World Bank. 

This accusation led to nearly a month of deliberation between the IMF’s leadership and its members. Georgieva has denied the allegations that she played a “key role” in changing the ranking of China in the World Bank’s 2018 Doing Business report, but that did not prevent parties from vocally opposing her leadership. 

The United States was one major opponent of the Bulgarian director. Members of both major political parties shared concerns over the findings, with several Republican lawmakers seriously worried about Chinese interference. House Financial Services Committee Chair Maxine Waters (D-CA) and Senate Foreign Relations Committee Chair Robert Menendez (D-NJ) also both publicly stated their concerns. Not only was Congress worried about the Managing Director, but Treasury Secretary Janet Yellen refused to return calls from Georgieva in the weeks following the report’s findings. 

While the United States was wary of the report’s findings, 17 African finance ministers released a joint statement praising her leadership during the COVID-19 pandemic. Although it acknowledged the probe, the letter mainly emphasized the importance of the stability of the IMF, as these states benefited from Georgieva’s distribution of funds during the pandemic. 

Additionally, former World Bank Chief Economists Anne Krueger and Paul Romer were against her retention, and another former Chief Economist Joseph Stiglitz referred to the investigation as a “hatchet job.” Stiglitz believes that Georgieva was targeted for her aggressive financial support for both developing countries and the fight against climate change.

Georgieva recently tweeted highlighting her efforts to support developing countries. (Twitter)

Ultimately, the IMF’s statement of confidence means that Georgieva will remain in power, and she has been able to continue her work. One of her first steps was to restore confidence for a new IMF emergency trust that is backed by the G20, which Janet Yellen most notably supported. This fund will allow new reserves of $650 billion to be given in long-term financing to island states and middle and low-income countries to further aid economic recovery. While this fund was announced in June, she was encouraged to push this now due to her strengthened position. 

In the week following her restoration of confidence, the Incumbent U.S. Deputy Treasury Secretary Wally Adeyemo reassured senators that while removing Georgieva wasn’t “appropriate at this point,” the U.S. is still holding her responsible for these irregularities. 

As for Georgieva, she is embracing the process of increasing accountability alongside internal debate at the IMF, calling it, “a process that I embrace, actually, wholeheartedly before this experience, and I embrace it even more as a result of that.”