The Data Manipulation Scandal That Could Topple the Heads of the World Bank and IMF, Explained

Justin Sandefur over at the Center for Global Development:

As the annual meetings of the World Bank and the International Monetary Fund kick off next week, the Bretton Woods institutions are mired in scandal. On September 15, the World Bank published an independent investigation led by former US Attorney for Washington D.C. Ronald Machen and the law firm WilmerHale into the involvement of senior World Bank management in data manipulation.

The report alleges Bank officials altered data to benefit both China and Saudi Arabia in its flagship Doing Business report, which ranks countries on their business regulations. The allegations cover incidents spanning the tenures of two World Bank presidents, Obama-nominee Jim Kim and Trump-nominee David Malpass, with a leading role for Kristalina Georgieva who now runs the IMF.

Major shareholders including the US and UK have expressed concern. The Economist magazine has called for Georgieva to step down, and numerous op-eds have stressed the damage to the Bank and the Fund’s credibility.

This saga requires all sides to set aside some ideological prejudices. Doing Business has been the darling of right-wing economists and business-oriented authoritarian governments for nearly two decades. Progressives cheered when the Bank temporarily suspended the index after the first audit reports of data manipulation emerged. Now as it looks like blame may fall on Kristalina Georgieva, who’s been pushing the Fund to do more on climate and more for developing countries, the tables have turned. Eminent progressive economists have labeled this “a coup attempt at the IMF” (Joe Stiglitz) due only to “anti-China hysteria” (Jeff Sachs); Georgieva has won the endorsement of 16 African finance ministers, while big-name conservative economists like Anne Krueger have called for her resignation.

Meanwhile, World Bank President David Malpass has virtually escaped scrutiny, deepening suspicions among Georgieva’s supporters that a plot is underway to scapegoat the progressive woman leading the Fund while Trump’s man at the Bank skates away.

More here.