World Bank inquiry finds IMF chief pushed staff to boost China rankings

World Bank updates

Kristalina Georgieva, managing director of the IMF, has been accused by a World Bank inquiry of directing efforts to artificially boost China’s ranking in the lender’s influential annual Doing Business report.

The allegations pertain to the period when she was chief executive of the World Bank and overseeing its efforts to raise new capital from stakeholders including China.

Georgieva said she disagreed fundamentally with the accusation, contained in a report commissioned by the bank from the law firm WilmerHale. It was presented internally on Wednesday and released by the World Bank’s board on Thursday.

The bank also said on Thursday that it had discontinued publication of Doing Business because of ethical concerns over the conduct of current and former members of staff involved in its preparation.

The WilmerHale report found that in the 2018 edition of Doing Business, China’s overall ranking had been artificially held at 78 — the same as in the previous year — as a result of late changes that elevated its position from 85.

The report alleges that Georgieva led efforts to improve China’s ranking at a time when she was “engrossed” in a campaign to secure a capital increase for the World Bank. 

It said that during the preparation of Doing Business 2018, high-ranking Chinese government officials “repeatedly expressed their concerns” to then World Bank president Jim Yong Kim and other senior bank managers that the country’s ranking did not accurately reflect its economic reforms”. 

WilmerHale said attempts were made in the days before publication of Doing Business 2018 to raise China’s ranking from 85, such as incorporating data for Hong Kong into its scores. When these efforts failed to deliver the desired results, the report alleged, Georgieva “became directly involved”. 

The law firm’s report, Investigation of Data Irregularities, alleged that Georgieva directed Simeon Djankov, one of the founders of Doing Business, to guide the report to publication and that Djankov subsequently “worked with Doing Business management to identify changes to China’s data that would raise the country’s score and increase its ranking”.

It said three indicators of business conditions — starting a business, legal rights-getting credit and paying taxes — were modified, raising China’s score by almost a point and increasing its ranking by seven places to 78.

In a statement issued by the IMF, Georgieva said: “I disagree fundamentally with the findings and interpretations of Investigation of Data Irregularities as it relates to my role in the World Bank’s Doing Business report of 2018. I have already had an initial briefing with the IMF’s executive board on this matter.” 

WilmerHale’s report also alleges irregularities in the preparation of Doing Business 2020, in which it says Saudi Arabia was artificially promoted to first in its top improvers list, ahead of Jordan.

Justin Sandefur of the Center for Global Development think-tank, a longtime critic of the Doing Business reports, said WilmerHale’s allegations chimed with his own criticism of the report for being too subjective and flimsy in its methodology. 

“The rankings jumped around like crazy, even when nothing was changing on the ground,” he said. “When you have that many judgment calls, and with such huge political pressures on the report, you have a recipe for manipulation.” 

Sandefur is one of six academics commissioned to present recommendations on how to improve Doing Business to Carmen Reinhart, the World Bank’s chief economist. He said he expected the results, presented two weeks ago, to be made public in the coming days.

The World Bank said on Thursday it was committed to advancing the role of the private sector in development and would work on “a new approach to assessing the business and investment climate”.

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