An internal committee of the World Bank managed to launch an independent investigation into top brass …
The World Bank ethics committee commissioned a law firm to sniff out what was going on.
Their report found that World Bank leaders, including then-Chief Executive Kristalina Georgieva, applied “undue pressure” on staff to boost China’s ranking in the bank’s “Doing Business 2018” report:
- Georgieva, and a key adviser, Simeon Djankov, had pressured staff to “make specific changes to China’s data points” and boost its ranking at a time when the bank was seeking China’s support for a big capital increase.
- The report raises concerns about China’s influence at the World Bank, and the judgment of Georgieva – now managing director of the International Monetary Fund – and then-World Bank President Jim Yong Kim.
- Georgieva said she disagreed “fundamentally with the findings and interpretations” of the report and had briefed the IMF’s executive board.
Kristalina Georgieva now heads the IMF. Oh dear.
IMF on the US.
The IMF is out with a series of headlines on the US economy as the coronavirus risks increase. They say:
- Cites important risks to outlook for US economy including resurgence in coronavirus cases, systematic increase in property
- Significant increase in US debt levels creates vulnerabilities; sees risk of extended period of low or negative inflation
- Repairing US economy will take prolonged period, further policy efforts needed to boost demand, support most vulnerable
- US should reverse existing trade barriers, tariff increases that are undermining stability of global trade
- US treatment of undervalued currencies as countervailable subsidy poses significant risk to global trading system
- Sees areas where US financial oversight could be tightened to further mitigate systematic risks
- US financial system has proven resilient, but crisis at early state and banks should continue to restrain capital distribution plans
The statements do not give a warm fuzzy feeling
Comments by IMF chief, Kristalina Georgieva
- But warns against premature withdrawal of fiscal support
- Monetary policy should remain accommodative
- Global economy is “not out of the woods yet”
- Second major virus wave could case further disruptions
- Job losses, bankruptcies, industry restructuring poses significant challenges
Some token remarks as a whole, but the headline comment is going to be an issue that is likely reverberate across politics and markets in the decade to come.
Regardless, these high debt levels aren’t going anywhere and when the next crisis comes along, we’ll be back here talking about the same thing with zero lessons learned.
IMF chief, Kristalina Georgieva, speaks in Davos
- Uncertainty is the major downside risk for global economy
- Wants to see governments stepping up action
- The world is more shock-prone as it is interconnected currently
- We are in a better place at the start of 2020 than in 2019
- Sees signs of trade, industrial slowdown bottoming out
- Consensus is that global rates will be low for longer
- Fed, PBOC have policy space
- Other countries need to look at fiscal tools more closely
Low growth, low rates. That is the new landscape that the world will have to deal with. And with central banks still injecting so much stimulus and being so cautious, we shouldn’t expect to see a crisis like the one in 2008-09 materialise.
However, any chance of major economies and the world returning back to what is perceived to be “normal” is probably not going to happen either.
IMF lowers 2019 global growth estimate for the sixth straight quarter
2019 is over but the outlook for growth keeps getting worse. The IMF lowered its 2019 global growth forecast to 2.9% from 3.0% in October. It was the sixth consecutive cut to the 2019 outlook.
The 2021 forecast was also lowered to 3.4% from 3.6%.
On the upside, the IMF maintained its 2020 GDP forecast at 3.3% and said that economic uncertainty is diminished with risks “less skewed” toward negative outcomes, albeit still tilted to the downside.
The big loser in this round of forecasts was India with the 2020 forecast cut to 5.8% from 7.0% on declining credit growth.
- 2020 Eurozone GDP seen at 1.3% vs 1.4% in Oct due to manufacturing contraction in Germany
- Boosts China 2020 GDP to 6.0% from 5.8% on trade deal
- Cuts 2020 US GDP to 2.0% from 2.1%
- UK forecast unchanged at 1.4%
For me, these forecasts don’t have much value on their own (as you can see from the frequent revisions) but they are a valuable way to visualize and interpret the evolving growth picture.
New Delhi needs to become more “transparent” on the fiscal numbers as it is a “laggard” among the G20 peers on this front, a senior official from the International Monetary Fund said here on Wednesday.
The government has been missing its budgeted fiscal targets for the past few years and there is a need for a “credible fiscal consolidation” which is more ambitious as well, the official said, adding this is more so as government has not addressed how it will make up for the massive Rs 1.45 lakh crore tax giveaways in the form of corporate tax cuts.
The comments come amid allegations of the budget math not adding up with some pointing to a Rs 1.7 lakh crore hole in the estimates, and also over 100 economists questioning the official data computation.
“Fiscal transparency should be increased. It is fairly difficult for the private sector to get the full picture on fiscal standing,” the fund’s deputy director Anne-Mary Gulde said speaking at an NSE event here.
“India is somewhat lacking in a programme on G20 data initiative on fiscal transparency where comparative countries have all made greater progress,” she added.
She said there is also a need for more credible fiscal consolidation as such a move will help reduce the relatively high level of debt and free up financial resources for the private sector. (more…)