Vilified and reviled just a few years ago, the IMF now appears to be an ally of African countries, from the moratorium on their debts to emergency aid in the face of Covid-19. But old habits die hard. Has the IMF really changed?
An emergency meeting of the board of directors – or an exceptional meeting – to decide whether to keep the executive director at the helm? Unfortunately, for the institution, this is a situation that has tended to be repeated in recent years. When the current leadership of the IMF was recently rocked by the ‘Doing Business 2018 report’ scandal, the chances of Georgieva leaving seemed quite slim.
Before Kristalina Georgieva, appointed in October 2019, the names of Dominique Strauss-Kahn, Rodrigo Rato or even Christine Lagarde, DG of the Fund until two years ago, have made headlines around the international organisation. Convicted, released, prosecuted or having benefitted from a case that was not pursued, the last three IMF leaders have seen their actions scrutinised.
In the end, only the Spaniard, Rato, was prosecuted for acts that took place after his mandate within the Washington-based institution. Strauss-Kahn was initially cleared by the IMF before being forced to resign after accusations of sexual assault. As for Christine Lagarde, she was confirmed in her position despite a conviction for negligence in an arbitration case when she was French minister of the economy.
Nevertheless, in this case, several issues deserve our attention. First of all, the role played by Georgieva – the first citizen of a former Soviet bloc country to hold such a position – in protecting the economies most affected by the Covid-19 crisis is a major argument in her favour.
Her position has won the support of these emerging economies, led by Africans, who are concerned about preserving continuity between the rules enacted in 2020 and their concrete application over time.
As an executive at an African financial institution tells us: “The IMF is the default custodian of the Special Drawing Rights (SDRs) equivalent to an additional $650bn allocated for all countries, including $33bn for Africa.” Under the leadership of its managing director, the Debt Service Suspension Initiative (DSSI) has come to fruition, she adds. The same is true for the creation of the Poverty Reduction Fund, the first vehicle chosen to redistribute SDRs.
This analysis is in line with the support expressed by many African ministers, to the senior official who spoke to us in early October; or, in civil society, the voice of Anglo-Sudanese billionaire Mo Ibrahim who reminds us that “this support is vital for African nations”.
On the other hand, because of the unspoken rules for appointing the IMF DG, Europe’s voice to save Georgieva counted for a lot.
Traditionally, the head of the IMF is European, while the president of the World Bank is American. The old continent’s support for Georgieva therefore makes sense in the face of the reluctance of the two largest shareholders on the IMF’s board – the United States and Japan.
In the end, the decision to keep the Bulgarian did not come about after a formal vote, as the board has the possibility of doing, but was, according to several sources, the subject of a consensus. This consensus has reduced the balance of power between the member countries. On this matter, the voice of France has been decisive, says a French official. It is Paris that has worked to rally Berlin to its cause, then Rome, before they tried, as a triumvirate, to convince the British and Americans.
These negotiations and their air of déjà-vu have, however, allowed another old, latent demand to be put back at the centre of the debate.
The one that wants to reshuffle the cards in the appointment of the IMF DG.
When will there be an emerging representative, or a binational one (to respect the European tradition)?
According to our information, several heads of state from the continent are working on a scenario that would see one of their nationals – more likely a European-African – take over the reins of the financial institution at the end of Georgieva’s mandate. A coming revolution?
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