Kristalina under the cosh
The managing director of the International Monetary Fund Kristalina Georgieva warns that global recovery is being hobbled by the pandemic and that rising inflation is another stone in the shoe.
The real stone in the shoe for Georgieva is her own fragile grip on her job. Georgieva was parachuted into the IMF post in 2020 from the World Bank at the behest of the eU when her predecessor Christine Lagarde was spirited off to Frankfurt to be president of the european Central Bank.
Under a historic deal dating almost all the way back to Bretton Woods in 1944, europe has nominated the head of the IMF and America the World Bank president. emerging market nations barely get a look in.
Georgieva has been cast as the villain for allegedly allowing the manipulation of the World Bank’s Doing Business report to give China, a big shareholder in the Bank, a credibility boost as a centre of commerce.
The validity of the report has seriously been undermined and future work cancelled following a probe by unimpeachable Washington law firm Wilmer hale.
The probe has bitterly divided public opinion, with the economist magazine warning that even a scintilla of doubt about data produced by the World Bank and IMF should be a resigning matter.
Nobel prize-winning economist Joseph Stiglitz, a former chief economist at the Bank, has rolled in behind Georgieva, claiming that the inquiry is being weaponised by conservative forces in Washington to ‘discredit and oust’ Georgieva because of the way in which she has directed increasing volumes of IMF resources to the developing world.
It is fortunate for Georgieva that the IMF and World Bank remain in super-cautious mode, and this year’s annual meetings are largely online.
This means that the scores of reporters who descend on Washington each year are stuck in their offices or at home, and a head of steam for the IMF managing director’s dismissal is much harder to build.
Both the IMF and World Bank have suffered in recent times from leadership turmoil. Former boss Dominique StraussKahn, who led the IMF through the financial crisis, resigned after graphic disclosures of his priapic needs.
A former president of the World Bank, Paul Wolfowitz, left after allegations that he had not followed due process in promoting a female friend to high office.
Lagarde only just survived the shadow of a conviction by a French court over financial impropriety when she was France’s finance minister.
In almost all of these cases, the claims, revelations and attacks, which undermined leadership, were in some way politically motivated. That is a charge now being made by Stiglitz in defence of Georgieva.
The truth is that with each round of allegations, the integrity of the institutions has suffered. This is particularly tricky in Georgieva’s case because of the value placed in the research and data capabilities of both organisations, which harbour the most elite group of economic, finance and development PhDs in the world.
Putting all this aside, Georgieva’s analysis of where the world is post Covid is less than encouraging than when the last set of forecasts were released in June, in that global output has moderated and the inflation genie released.
The IMF’s managing director seems much less convinced that this is temporary than her central banking compatriots. her survival will depend on the steadfastness of european backing. The Americans are less enthusiastic about her carrying on.
Fortune magazine reports that Georgieva has been seeking a conversation with US Treasury Secretary Janet Yellen, generally considered of liberal views. But so far, the silence has been deafening.
Fantasy football
The Premier League was among the franchises which threw its arms up in horror at the prospect of losing its crown jewels to the not yet totally extinct european Super League.
Now, it has a chance to make amends. Second tier clubs, such as Leicester City, would like to see their richer brethren set up a central fund of around £1bn, which could offer the lower orders the factoring services used to pay wages and other bills while they wait for broadcast money and transfer fees to tumble into their bank accounts. At present, they are dependent on high fees and interest rates charged by City intermediaries.
As always, it looks as if the PL won’t miss an opportunity to miss an opportunity.