(FreedomBeacon.com)- The reputation of the World Bank and the IMF has been damaged due to the data-rigging scandal that happened in 2017, and it could cause major long-term damage.
Government officials, outside experts and former staff say it doesn’t matter whether Kristalina Georgieva, the chief of the IMF, was actually to blame for the scandal, which involved changing data at the World Bank that ended up benefitting China.
The revelation of the scandal forced the World Bank to stop conducting the investment climate rankings known as “Doing Business.” And it could be challenging for the organization to repair the damage it has done.
Some have even questioned whether the influential research the World Bank has done — and plans to do in the future — could be subject to influence from shareholders.
To this point, Georgieva has denied strongly that she applied any “undue pressure” on the staff to make changes to the report. Ultimately, China’s ranking jumped from 85th to 78th in the 2018 version of the report. When that happened, the World Bank was trying to get support from China for a significant capital increase.
A country’s higher ranking in the publication by the World Bank could result in a boost in a country’s financial markets, overall economy, inflow of investment funds from overseas and more. That’s because those rankings are built directly into many fund managers’ analytical models.
As a result, countries are always trying to influence officials with the World Bank to improve their standing in the rankings.
Instead of taking the blame for the whole ordeal, Georgieva placed the blame on Jim Yong Kim, the former president of the World Bank. She said Kim ordered the changes that fell outside the established methodology the report used to follow.
A review of the report that was conducted in December of 2020 first identified these changes. Included were the removal of certain metrics for how much time it takes to obtain invoices and open a new bank account. That, then, reduced how much time was estimated to start a business in either Shanghai or Beijing.
U.S. Senators James Risch and Robert Menendez recently wrote a letter to President Joe Biden, asking him to force “full accountability in the World Bank situation. The letter read:
“Given how critical it is that this data be … seen as unimpeachable, these allegations are deeply disturbing. The impact these allegations could have on the strength and reputation of our international financial institutions and the Bretton Woods system are still unknown — but surely they will not be good.”
Many prominent economists are standing behind Georgieva by publishing tweets and opinion pieces. Joseph Stiglitz, the former chief economist at the World Bank, for example, labeled the allegations as a “coup attempt” for the IMF.
The former official in charge of the “Doing Business” report at the World Bank, Shanta Devarajan, also said he never received pressure from Georgieva to make any changes to the report.