Editorial | Keep, and fix ‘Ease of Doing Business’ report

It would not be a surprise if Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), does not survive the scandal that as a senior official at the World Bank, she pressured the staff to manipulate data in the bank’s Ease of Doing Business report in favour of China. As the IMF’s ethics committee deepens its probe of the allegation, Ms Georgieva’s position seems increasingly untenable.

It would be a shame, though, if, in addition to whatever sanctions that Ms Georgieva may face, there is the permanent demise of these annual reports, which the World Bank says it will discontinue. The surveys are of value to governments and businesses, and it cannot be beyond the capability of a major international institution like the World Bank to fix the problems that have been identified and ensure the integrity of future reports. This, of course, will depend on the honesty of bank officials, which can be buttressed by robust external oversight, including periodic, independent external audits of processes.

The claim against Ms Georgieva is that in 2017, as CEO of the World Bank – at a time when it was preparing for a capital call on members, including China – she feared upsetting Beijing, whose Ease of Doing Business ranking was destined to slip in the upcoming report. So she, according to findings of an investigation done for the World Bank’s ethics committee by an outside law firm, was “directly involved” in efforts to have staff make China look better than the real data showed.

The report said that Ms Georgieva’s then boss, Jim Yong Kim, the president of the World Bank Group, who left the job in 2019, was not directly involved in those efforts, but his aides also pressured the staff. They presumably knew what Mr Kim wanted.

Separately, there were allegations, involving other officials, that the World Bank, in subsequent reports, fudged data to placate Saudi Arabia and the United Arab Emirates. China’s ranking in the questionable 2018 report (published in October 2017) was 78 among 190 countries, the same position as the previous year, and eight places below Jamaica in the Ease of Doing Business rankings.

‘FALSE AND SPURIOUS’

In April 2018, World Bank Group shareholders agreed to a US$13-billion paid-in capital increase, an arrangement that lifted China’s stake in the institution from 4.68 per cent to 6.01 per cent. China remained the third-largest shareholder after the United States and Japan. The agreement also included a US$52-billion callable capital increase, as well as rule changes that effectively translated to the World Bank having to lessen lending to China.

Last week, Ms Georgieva rejected the allegations against her as “false and spurious”. With respect to how she operated at the World Bank, the IMF boss told the staff last week: “I would tell staff to check, double-check, triple-check, but never manipulate what the data tells us.”

It is difficult to believe, as Ms Georgieva would have us do, that the whistle-blowers who spoke out either concocted a fantastical story, grotesquely misinterpreted her intentions, or that she was the subject of a massive, orchestrated smear campaign by former colleagues. That’s hard to swallow.

We can see why it is plausible that Ms Georgieva might have behaved as is claimed, and why looking good in the Ease of Doing Business ranking would be important to China – as it is to Jamaica. For despite flaws that may exist in the conceptualisation and execution of these types of reports, they have real and useful benefits to countries. They signal to investors which states are best to put their money in, and why. There are, too, the bragging rights they provide – and a sense of arrival.

And critically, their indices help governments to gauge people’s perception of the quality and efficiency of the services they provide and the likely impact on business decisions. Ultimately, they are another tool to help either side, private enterprise and government, make rational decisions. That carries additional weight when the presenter of the information is perceived to be a neutral and credible arbiter – which was what was important about having the World Bank’s imprimatur on the Ease of Doing Business report.

REBUILDING ITS CREDIBILITY

Clearly, the credibility of the reports has been undermined by the recent revelations. It is possible, it seems, for those who are sufficiently loaded or well-heeled to pay to play. That, though, need not be a permanent condition. The way to fix the flaw is not by dumping the report altogether, but by rebuilding its credibility.

The World Bank must remove all implicated staff and ensure a transparent data-gathering system for the document. The system by which that data is analysed and conclusions are arrived at, should be subjected to periodic, robust external reviews.

Having information, such as reported in the Ease of Doing Business reports, has been useful in holding Jamaica’s Government to account and in insisting that it pursues rational economic policies. Our Government has found value in responding to these signals. There, however, must be “no manipulation of what the data tells us”. We just want the facts.