Skip to content
IMF seeks to allay doubts over data rigging scandal, move forward with new program


Following a data-rigging scandal that engulfed its managing director, the International Monetary Fund is striving to regain a foothold in international financial markets while working to balance the competing interests of its two major donors. funds, the United States and China.

The IMF board cleared group leader Kristalina Georgieva earlier this week for her role in a World Bank report that was manipulated to benefit China, but the scandal remains an active problem for the US Treasury and some American lawmakers. “If the allegations are true that China can intimidate objective economic analysis to achieve desired results, it is concerning,” said Sen. Jim Risch of Idaho, the leading Republican on the Senate Relations Committee foreigners.


Do you think there is a role for the IMF today? If so, what should it look like? Join the conversation below.

On Thursday, the IMF’s ultimate governing body issued a statement outlining plans to boost financial support to low-income countries to overcome the pandemic and a new focus on financing for climate change mitigation. IMF officials have also expressed their willingness to move beyond the data rigging scandal.

“Thorough work has been done by the IMF board,” said Magdalena Andersson, the Swedish finance minister who chaired the press releases committee. “There is unanimous and full support for Kristalina and support for the way she conducts her job as Managing Director of the IMF.”

The scandal is not the group’s only pressing challenge. Established as the lender of last resort for a newly organized global financial system after World War II, the IMF today faces broader questions about its relevance in turbulent global markets.

Private investors, the Federal Reserve’s new lending facilities, and China’s rise as a lender to other countries have all supplanted some traditional functions of the IMF. This leaves the organization with a diminished role in global finance and growing skepticism on the part of many in Washington about its future.

The rise of China as a lender presents a particular conundrum. Many US officials fear that IMF programs will ultimately benefit China. Such concerns became clear when in 2018 Pakistan approached the IMF for a bailout, in part because it had incurred too much debt for China’s Belt and Road Initiative projects. . China’s foreign loans and US concerns have only grown since then. Then-Secretary of State Mike Pompeo criticized the IMF at the time, insisting that IMF funds should not be used to bail out China.

In recent financial turmoil, it was the US Federal Reserve that flooded the global financial system with hundreds of billions of dollars in central bank liquidity swaps. The Fed has provided funds directly to many emerging markets, traditionally the domain of the IMF.

“The Fed is the reluctant lender of last resort in the world. The Fed is bailing out the system, ”said Mark Sobel, a longtime senior Treasury official who also served as the United States’ representative at the IMF.

Instead, during the pandemic, the IMF prepared to deploy the full firepower of around $ 1 trillion in lending capacity, but so far it has played a much smaller role.

Almost 100 countries have applied for loans. Total IMF lending rose from $ 74 billion in 2019 to $ 106 billion at the end of 2020. Loans on concessional or zero-interest terms fell from $ 7 billion to $ 14 billion. The IMF pledged at this week’s meeting to further increase these lending.

Even small concessional loans are useful to the world’s poorest countries, but the sums are modest in a context where governments spent more than $ 10 trillion during the crisis.

“Most countries have been able to borrow at historically low interest rates,” the IMF said in response to this limited use. “Therefore, they did not ask for additional support. “

The IMF is also working to issue $ 650 billion in Special Drawing Rights, an IMF monetary asset called SDRs that would be distributed among its members. Countries can exchange SDRs for dollars. U.S. Treasury Secretary Janet Yellen backed the initiative, which gained additional support at meetings this week.

He has skeptics on both sides, however.

Many conservatives in Washington are concerned about how funds might be channeled to Iran or Myanmar. Meanwhile, progressives have noted that funding is going massively to rich countries. At the IMF meeting, rich countries agreed to donate funds, but on a voluntary basis.

The International Monetary Fund has drawn the attention of some conservatives in Washington concerned about how funds might be channeled to Iran or Myanmar.


Mandel Ngan / Agence France-Presse / Getty Images

The IMF has also prioritized exploring climate finance, another difficult endeavor. Many member countries are pressuring the IMF to take on such a role, which was officially approved on Thursday.

The mechanics, however, are difficult for the IMF. Climate programs rely on new contributions from member governments that are difficult to obtain on a large scale. The IMF said climate programs would likely be included when countries continue with traditional IMF lending in times of crisis.

“This might not translate into large loan amounts for individual countries, and it would be very complicated to administer,” said Martin Mühleisen, former head of the IMF’s Strategy, Policy and Review Department. .

In the midst of these headwinds, it is also unclear how quickly IMF director Georgieva will be able to ease concerns about her own future with the group.

After the IMF board cleared Georgieva on Monday, she sought to re-emphasize her agenda in press conferences on Wednesday and Thursday. Addressing the scandal, she said, “Look for the problem, it’s across 19th Street,” a reference to the World Bank headquarters, which is across from the IMF headquarters in Washington.

An IMF spokesperson said Ms. Georgieva’s remarks on “19th Street” were meant only to emphasize that the investigation was about a World Bank report. Georgieva is planning a number of steps, starting with a town hall-type meeting with IMF staff on Monday. The IMF’s executive board is also planning further meetings on the issue. Additionally, the IMF already has a detailed data review process, under the supervision not of Ms. Georgieva, but of IMF No. 2 official Geoffrey Okamoto, a former U.S. Treasury official.

China’s Foreign Ministry, addressing the World Bank survey last month, said it stressed the importance of improving the country’s business environment, “and its achievements are visible to all. “. The Chinese Embassy in Washington did not respond to additional questions about the report.

In a phone call with Ms Georgieva on Monday, the Treasury Department said Ms Yellen had called for “proactive measures [to] strengthen the integrity and credibility of data at the IMF.

A person familiar with the Treasury’s point of view said the Treasury is not considering the underlying case and is also still awaiting the outcome of a second malpractice investigation at the World Bank, where Ms. Georgieva was in charge. n ° 2 from 2017 to 2019.

If the IMF is to move forward and rebuild its credibility, the group must implement its new agenda, said Sobel, the senior Treasury official. “Time, and doing their job, and doing it right, and keeping their heads down will be the best thing possible,” he said.

Write to Josh Zumbrun at

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8