aisle in American politics. Of all the countries to cave in to, Georgieva chose the very worst.
THREE BIG PROBLEMS The first issue is that the IMF, as the
Economist explains, is “the custodian of data standards for the world’s macroeconomic statistics.” That data, compiled on every angle and corner and cranny of the economies of member countries, is used to inform decisions about finance, economics, and policy by the IMF, investors, and other lenders. And Georgieva’s (alleged) prioritization of political expediency over data integrity at the World Bank taints the entire research operation of the IMF. More broadly, the IMF – like many multinational organizations (such as the World Bank, the United Nations, and the World Health Organization) that serve multiple masters with conflicting agendas – suffers from a tension between its research aspirations and its diplomatic imperatives. At the World Bank, Georgieva allowed the need to appease China to trump the objectivity of the EoDB product. How will the IMF (under Georgieva) react the next time it faces a similar decision point – where, say, it might have to offend China or some other noisy rich country? The objectivity of the decision making of Georgieva – and, by extension, the IMF – has been compromised. And, of course, let’s not forget that the culprit at the World Bank was China . U.S. policymakers – whose support Georgieva needs if she is to remain the head of the IMF – are toxically allergic to any whiff of China- pandering. Anti-China sentiment is one of the very few policies that unites both sides of the
WHY IT MATTERS TO (EMERGING) MARKETS
One of the first victims of the scandal has been the Ease of Doing Business survey itself. In June 2020, the World Bank “paused” the annual report following internal reports of irregularities. In mid-September – the day after the publication of the WilmerHale report – the EoDB survey was axed altogether. It made sense to excise what threatened to become a cancer to the organization. It’s still an incalculable loss for countries looking to benchmark their policies to higher standards, to investors looking for insight on a market’s business climate, and as a motivating factor to egg on countries to reform. Anti-China sentiment is one of the very few policies that unites both sides of the aisle in American politics. Of all the countries to cave in to, Georgieva chose the very worst. As emerging and frontier market brokerage Tellimer explains... The loss of a supposedly independent, rigorous, objective, comparable data set with global coverage and a time series stretching back to 2006 matters for long- term investors in [emerging markets]. Ease of Doing Business was a unique data set.
American Consequences
55
Made with FlippingBook - professional solution for displaying marketing and sales documents online