Oct 12, 2021 - Politics & Policy

Another fine mess for the IMF

Illustration of the IMF's logo in pieces
Illustration: Aïda Amer/Axios

The messiness of international politics is on full display this week in Washington, D.C., at the spring meetings of the International Monetary Fund and the World Bank. That's inevitably going to make it harder for the storied institutions to help the world's poorest countries recover from the pandemic.

Why it matters: The IMF's leadership has never been weaker — managing director Kristalina Georgieva is weakened by scandal, while her #2, Trump nominee Geoffrey Okamoto, is generally regarded as inexperienced and otiose.

Driving the news: The IMF said late Monday that Georgieva will keep her job after she was caught up in a scandal surrounding a World Bank survey on the ease of doing business in countries around the world.

  • The fight, which involved Georgieva personally hiring her own crisis PR firm, pitted the United States and Japan, who wanted her fired, against the European Union, United Kingdom, Russia, and China, who wanted her to remain.
  • It took eight separate board meetings before an agreement was finally reached that Georgieva should be allowed to keep her job.

The big picture: The managing directorship of the IMF is the most political job in international finance. To be successful, the IMF chief needs to corral the support of all the world's major economies, including the U.S. — support that Georgieva seems to lack.

  • Between the lines: The shareholders of the IMF are also the shareholders of the World Bank. Now that Georgieva is safe, it is certain that the bank's president, David Malpass, will also remain in his job.
  • While Malpass was also tarnished as the scandal spread, the evidence against him was never as strong as the evidence against Georgieva.

Flashback: For all its geopolitical importance, the job of IMF managing director has attracted its fair share of controversy and scandal.

  • Previous occupants this century include Horst Köhler, who resigned under pressure as president of Germany; Rodrigo Rato, who was sentenced to 4.5 years in prison for embezzlement in his native Spain; and Dominique Strauss-Kahn, who was charged with sexual assault in New York and "aggravated pimping" in France, although he was acquitted of both charges.

Our thought bubble: There are few winners this week. But one institution has emerged even more solidified and entrenched — the anachronistic and colonialist convention that the IMF should always be led by a European and the World Bank by an American.

  • If and when Georgieva is eventually replaced, you can be as sure as ever that her replacement will come from Europe, rather than from the countries in the Global South whom the Fund ostensibly serves.

Go deeper: U.S. keeps distance from IMF chief

Go deeper