Following revelations about World Bank leaders putting pressure on staff to enhance China's score in one of its influential reports of the global body that ranks countries on the ease of doing business in a country, dismay at the incident was expressed by a number of investors and campaigners.
On the other, it could also become harder for investors to assess where to put their money because the World Bank had subsequently discontinued the "Doing Business" series of annual reports, they also said.
"The more I think about this, the worse it looks," said Tim Ash at BlueBay Asset Management, and added that banks and businesses around the world considered the World Bank’s report as important since the organization had started publishing it in 2003.
"Any quantitative model of country risk has built this into ratings. Money and investments are allocated on the back of this series."
World Bank chiefs including Kristalina Georgieva – who now is the chief of the International Monetary Fund - had used "undue pressure" to enhance China's ranking in the "Doing Business 2018" report, found an investigation by law firm WilmerHale who was appointed by the World Bank's ethics committee.
At the time when the alleged incident had happened, the Washington-based multilateral lender was trying to secure a big capital contribution from China.
Reacting to the report, Georgieva said she disagreed "fundamentally with the findings and interpretations" of the report, and added that the IMF's executive board had been brief by her about the report.
The report was released earlier this week on Thursday.
The investigation by the ethics committee was welcomed by the advocacy group Tax Justice Network.
"The bigger question is how, if it is even possible, the Bank can eliminate the apparent corruption of the institution," the British-based group's CEO Alex Cobham said on Twitter.
Such reports prepared by the World Bank and others have been given importance but were also subject of susceptible to manipulation, said economists.
There can be an obsession about their positions in the reports for a number of governments, particularly those of the emerging market countries that want to showcase the progress made within the economies and attract investment, economists said. The importance of such reports lies in the fact that they consider a range of issues within a country – from the ease of paying taxes to legal rights.
After being ranked 16th in the 2020 report by the World Bank, the United Arab Emirates had set a target of being the top ranking country in the 2021 report, while Russia’s position in the report was raised from a dismal 120th in 2011 to 28th in 2020. Russian President Vladimir Putin had set a target for the country to be included in the top 20 by the end of the last decade.
"The task of improving the business climate is not linked to the existence of any ratings. Ratings are just a yardstick," Kremlin spokesperson Dmitry Peskov told the media on Friday when asked to comment on the World Bank ditching the ratings.
(Source:www.ocgnews.com)
On the other, it could also become harder for investors to assess where to put their money because the World Bank had subsequently discontinued the "Doing Business" series of annual reports, they also said.
"The more I think about this, the worse it looks," said Tim Ash at BlueBay Asset Management, and added that banks and businesses around the world considered the World Bank’s report as important since the organization had started publishing it in 2003.
"Any quantitative model of country risk has built this into ratings. Money and investments are allocated on the back of this series."
World Bank chiefs including Kristalina Georgieva – who now is the chief of the International Monetary Fund - had used "undue pressure" to enhance China's ranking in the "Doing Business 2018" report, found an investigation by law firm WilmerHale who was appointed by the World Bank's ethics committee.
At the time when the alleged incident had happened, the Washington-based multilateral lender was trying to secure a big capital contribution from China.
Reacting to the report, Georgieva said she disagreed "fundamentally with the findings and interpretations" of the report, and added that the IMF's executive board had been brief by her about the report.
The report was released earlier this week on Thursday.
The investigation by the ethics committee was welcomed by the advocacy group Tax Justice Network.
"The bigger question is how, if it is even possible, the Bank can eliminate the apparent corruption of the institution," the British-based group's CEO Alex Cobham said on Twitter.
Such reports prepared by the World Bank and others have been given importance but were also subject of susceptible to manipulation, said economists.
There can be an obsession about their positions in the reports for a number of governments, particularly those of the emerging market countries that want to showcase the progress made within the economies and attract investment, economists said. The importance of such reports lies in the fact that they consider a range of issues within a country – from the ease of paying taxes to legal rights.
After being ranked 16th in the 2020 report by the World Bank, the United Arab Emirates had set a target of being the top ranking country in the 2021 report, while Russia’s position in the report was raised from a dismal 120th in 2011 to 28th in 2020. Russian President Vladimir Putin had set a target for the country to be included in the top 20 by the end of the last decade.
"The task of improving the business climate is not linked to the existence of any ratings. Ratings are just a yardstick," Kremlin spokesperson Dmitry Peskov told the media on Friday when asked to comment on the World Bank ditching the ratings.
(Source:www.ocgnews.com)
