External review finds deeper rot in World Bank 'Doing Business' rankings

WASHINGTON, (Reuters) - Weeks before the World Bank scrapped its flagship Doing Business rankings following a damning independent probe, a group of external advisers recommended an overhaul of the rankings to limit countries' efforts to "manipulate their scores."

An 84-page review, written by senior academics and economists, was published on the bank's website on Monday, about three weeks after it was submitted to World Bank chief economist Carmen Reinhart.

The World Bank on Thursday said it would cancel the "Doing Business" series on country business climates, citing internal audits and a separate independent probe by law firm WilmerHale that found senior World Bank leaders, including Kristalina Georgieva, who now heads the International Monetary Fund, pressured staff to alter data to favor China during her time as World Bank CEO. Georgieva has strongly denied the findings.

World Bank President David Malpass, in his first public comments since the data rigging controversy broke last Thursday, told CNBC that the WilmerHale report "speaks for itself" and that the bank will explore new approaches to helping countries improve their business climates.

The review published yesteday was written by a group assembled by the World Bank in December 2020, after a series of internal audits revealed data irregularities in reports on China, Saudi Arabia, the United Arab Emirates and Azerbaijan.

It calls for a series of remedial actions and reforms to address the "methodological integrity" of the Doing Business report, citing what it called "a pattern of government efforts to interfere" with scoring for the reports in past years.

"The World Bank needs an introspection. It has been advocating country reforms for better governance, transparency, and practices. Now it has to use the prescription for its own reform," said Mauricio Cardenas, the Columbia University professor and former Colombian finance minister who chaired the expert panel.