Georgieva-Economy

Kristalina Georgieva

Kristalina has a strong economic professional background starting with her research in development economics at London School of Economics and eventually moving forth to her tenure in both the EU as well as the World Bank. Her economic policies predominantly focus on developmental economics in under-developed countries. She is often criticized for the lack of knowledge to deal with developed economies. Her economic policies also tend to have a correlation with care and sustenance in the aid industry. 

Tenure in European Union

During her tenure as the Vice President of the EU, she was in charge mainly of the human resources and the budget under the leadership of Jean Claude Junker between 2014 to 2016. These years proved temporal to the Greek financial crisis and the subsequent EU bailout that followed. But Kristalina steered away from press releases regarding economic policies as well as the internal policy-making of the same.

Instead, we saw her focus on the developmental aspect of things; she led the policy of the European Commission that provided 80 million Euros from the EU budget to help with the accommodation of 20,000 refugees through a rental support initiative. This was implemented by UNHCR on the ground, and in coordination with the Greek Authorities. This is where it can be first inferred that she preferred developmental over structural economics policies.

We can also draw a parallel later on wherein the largest IMF bailout, namely the 57 billion USD of Argentina, left her with the challenge of tackling President Alberto Fernandez who was both populist and had little regard for IMF nomenclature; this concluded with no new austerity measures imposed and a promise of debt repayment. This is a very good example of her watered-down approach to tackling conflict.  

Policies regarding under-developed nations

Kristalina is especially close to her ex-colleague Samir Suleymanov, the World Bank’s director in Russia. Further, the World Bank and IMF collaboration, especially in the Joint IMF-World Bank Development Committee played an important role in the power dynamics of her position. This combined with Kristalina’s previous decade as an employee of the World Bank eventually garnered more influence from the WB officials in her policy-making and decisions. The Annual Meetings of the Boards of Governors of the IMF have the presence of the World Bank, and together they consult and present their countries’ views on current issues in international economics and finance. In this, she pushed for consensus on a $13 billion capital increase and reform package towards less economically developed countries which would decrease lending to China and other wealthier developing countries; this is closely linked to the previously announced World Bank Agenda.

World Bank term: focus on unequal burdening policies 

Kristalina was the Chief Executive of the World Bank Group from 2017 to 2019 and served as Acting President of the World Bank Group. Her debt balancing and transparency agenda were the first to find ground during her World Bank term wherein she proposed to use borrowing to fund developmental needs for productive purposes and work with creditors on transparency and sustainability of lending practices.

This was during the 2008 Euro Crisis which changed the face of how Bretton Woods systems viewed Europe in terms of stricter regulation and austerity measures thus explaining her need for transparency.  As part of her IMF’s statement of the first release, she talks about the exact transparency and improvement of debt financing, clearly showing her point of influence.  

Country lending and borrowing trends

The IMF is primarily focused on the lending to and borrowing from countries; Kristalina’s managing and coordinating efforts as well as her influence are most prevalent here. Her previous World Bank policy influence is evident in her current decision making when she carries forth her debt balancing agenda even under the IMF. She calls for collaboration to prepare for debt restructuring cases that involve non-traditional lenders, including creditor countries outside the Paris Club. 

Her focus stems towards the developing world nations and less on developed nations which tie back to her childhood as well as her career trajectory. In terms of dealing with emergency response during a crisis for country borrowing, she has clearly been seen proposing to simplify the processes. She believes this can be done by filling the gap in concessional financing to provide some debt relief to the poorest member countries. Introducing more stringent administrative measures in borrowing terms is also part of her agenda to aid poorer nations. The stress on the importance of poorest country preferential systems highlights the unequal burdening agenda Kristalina will be pushing for in the IMF.  

Response to the COVID-19 Outbreak

The International Monetary Fund with Kristalina’s push approved $500 million on Monday to cancel six months of debt payments for 25 of the world’s most impoverished countries so they can help tackle the COVID-19 pandemic. She issued a statement saying that the IMF executive board approved the immediate debt service relief for 19 African countries, Afghanistan, Haiti, Nepal, Solomon Islands, Tajikistan and Yemen. This, while a very forward-thinking move, shows her strong economic background and development politics wherein the $500 million would not dent IMF’s budget but manage to win political and international support. This also serves as an example in Kristalina’s policymaking during critical times of crisis.

Aashna Gadia

Author and Editor