IMF Agony Goes Way Beyond Georgieva’s Survival
The lender of last resort isn’t anymore, and suffers crises of identity as well as leadership. Big central banks are muscling it aside.
The IMF’s problems are bigger than Kristalina Georgieva.
Photographer: Clemens Bilan/Getty Images
The crisis at the International Monetary Fund goes far beyond whether Managing Director Kristalina Georgieva clings to her job or is pushed out less than halfway through her five-year term. The IMF increasingly resembles a relic striving to be inoffensive yet important. Its top priorities need to be clarity of mission, figuring how to use its considerable resources, and coming to terms with a more marginalized role. The lender could use a few red lines, too.
Created in 1944 to help manage the post-World War II global economy, the IMF no longer knows what it stands for. Key parts of its role have been usurped by powerful central banks, principally the Federal Reserve. Recent chiefs have been dogged by controversy. And an archaic selection process by which a European always leads the IMF — and an American runs the World Bank — becomes harder to defend each time the top job falls vacant.
Georgieva is fighting for her leadership. The executive board spent last week reviewing the findings of an investigation by law firm WilmerHale, commissioned by the World Bank. It alleged that while working at the bank, she pressured staff to adjust data for a ranking in China’s favor. Her attorney said the probe and conclusions have “fundamental procedural and substantive errors.” The kerfuffle will probably dominate the annual meetings this week of the IMF and World Bank, conclaves typically devoted to forecasts and commentary on the health of global and national economies.
Whether Georgieva survives or not, any leader will need a clear sense of what they’re trying to do and what the IMF’s goals ought to be. The global economy has had its share of upheaval in recent decades. Ironically, that’s been accompanied by a diminishment of the fund's clout. The high-water mark of influence was probably during the late 1990s financial crisis in Asia, when the lender led bailouts of South Korea, Indonesia and Thailand. Around the same time, emergency loans supported Russia and Brazil during meltdowns.