Kristalina Georgieva, the embattled head of the IMF, sought to return to business as usual on Tuesday, calling on governments to step up coronavirus vaccination rates and economic reforms to minimise the “risks and obstacles” to a balanced global recovery.
Speaking from Washington, just days before the annual meetings of both the IMF and World Bank, Georgieva told world leaders they needed “policy credibility” in what was likely to be a bumpy recovery period “to build trust with citizens and markets”.
However, the fund’s managing director did not mention the questions hanging over her own credibility and that of the IMF following accusations that she artificially boosted China’s ranking in a World Bank report when she was its chief executive.
The IMF’s executive board took evidence from WilmerHale on Monday as part of its “thorough, objective and timely review” of the issues raised by the law firm into Georgieva’s role in manipulating the 2018 Doing Business report at the World Bank. It also said it would meet Georgieva “soon” as part of that investigation.
The IMF’s leading shareholders may well want to take an initial view on her position as managing director before the annual meetings next week. A crucial factor will be whether the fund’s audience of finance ministers and central bankers accept that its analyses, forecasts and publications remain free from bias and influence from its most powerful shareholders.
Georgieva has denied all wrongdoing during her time as World Bank chief. But the alleged findings of the WilmerHale report have led to a war of words between her supporters and those detractors who say Georgieva’s actions have led to “unprecedented reputational risks” for the bank and the IMF.
In her speech, Georgieva outlined the main messages she will deliver next week if confirmed in her role. Economic forecasts would “moderate” from the 6 per cent global growth rate forecast in July because the global economy remained “hobbled” by the pandemic, she told to the event organised by Bocconi University.
Describing the recovery as “like walking with stones in our shoes”, Georgieva said the biggest obstacle to recovery was the pandemic-related weakness in many emerging economies, which was creating a “divergence in economic fortunes [that] is becoming more persistent”.
Rising inflation was likely to subside in 2022, she said, but this was harder in poorer countries that had been disproportionately hit by the rise in food and energy prices. Central banks in these countries were right to have tightened monetary policy, she added, noting this was “a difficult choice amid a stop-start recovery”.
To improve the economic outlook and improve living standards, Georgieva said the IMF’s key message was “vaccinate, calibrate and accelerate”.
Without a major global immunisation drive, “large parts of the world will remain unvaccinated, and the human tragedy will continue”, she added. “That would hold the recovery back. We could see global GDP losses rise to $5.3tn over the next five years.”
Georgieva said the IMF would recommend next week that the poorest countries should borrow more from the fund, given the divergence of global economic fortunes between them and developed countries.
“This extraordinary crisis has divided us — but it has also armed us with knowledge that allows us to think differently about our future,” Georgieva said.