First appeared in The Telegraph Magazine on June 22, 2024
Interview by Szu Ping Chan
The buck stops with her
How did Kristalina Georgieva, child of Bulgarian communism, work her way to the top of the IMF - and the global financial system?
You might not know who Kristalina Georgieva is. But prime ministers, presidents and central bankers do. When she speaks, they listen. The Bulgarian economist is the managing director of the International Monetary Fund (IMF), one of the world's most powerful financial institutions, which counts more than 190 countries as members.
Being part of the IMF unlocks expert advice as well as financial support when times get tough. And under her stewardship, it injected $1 trillion into the global economy to deal with the pandemic.
Georgieva's message last month that the UK economy is in a 'good place' was seized upon by Jeremy Hunt as one reason Britons should vote Tory in the coming election. Keeping almost 200 countries happy is no mean feat. But that's exactly what Georgieva (pronounced with two hard 'g's) is tasked with as IMF boss.
The organisation was established in 1944, alongside the World Bank, as the Second World War neared its end, to help manage global exchange rates. These days, it's better known for extinguishing economic fires sparked by too much debt, as well as its economic forecasts. But this modern role has brought with it accusations of being excessively political.
Beijing has already criticised the IMF's forecasts for China this year for being too negative, while British politicians still remember its warning that Brexit would plunge the UK into recession. It did not.
Others say the hair shirts the IMF attaches to multibillion-dollar bailouts are too much to bear. At the height of the country's debt crisis in the 2010s, the former Greek finance minister Yanis Varoufakis compared its austerity drive to 'fiscal waterboarding'.
It's clear that Georgieva can make or break a nation's finances - but who is she? And can she defend an institution under fire?
Our conversation takes place hours after she has delivered the IMF's annual verdict on the UK economy. The main message – recommending lower interest rates, and that it would be unwise to cut taxes - has been highly political, on what will turn out to be the eve of Rishi Sunak's snap election announcement. Georgieva has been in back-to-back meetings in Westminster all morning, but arrives right on time for the interview, at a cordoned-off bar next to her hotel overlooking the Thames. This flying visit to the UK is one of about 20 she will embark on this year; Stresa in Italy is her next stop, for a G7 finance meeting.
Her aides spend much of their time looking at their watches, but Georgieva smiles and greets everyone in the room, exchanging travel tips with the photographer and relaxing back in her chair as if this were her only appointment.
Her jet-setting is a far cry from her beginnings. The IMF chief is the daughter of a shopkeeper and a civil engineer who grew up modestly behind the Iron Curtain. 'My family was not wealthy,' she says. Her father was the grandson of Ivan Karshovski, a celebrated revolutionary who helped to build the Bulgarian state after it won independence from the Ottoman Empire. However, while she was a child, Georgieva's father suffered a blood clot that resulted in an amputated leg. '[He] got fairly sick relatively early in his life and that led to us genuinely just struggling to make ends meet.' She was barely 25 when he died.
As descendants of one of the architects of an independent Bulgaria, Georgieva and her family chafed against communism. Her older brother, an artist, was thrown in jail for trying to leave the country. 'Since my family was not a communist family, we were, on occasion, faced with the impact of a more repressive society,' she recalls. 'Having a brother who went to prison threw a very big shadow over my own professional life.'
At the time, Georgieva was in the process of applying for tenure at what is now the University of National and World Economy in Sofia. The candidates had been whittled down from 15 to just one - her - but her brother's detention meant the official appointment was 'delayed and delayed and delayed'.
'My father was in hospital with a very serious condition,' she says. 'My mother was looking after him. There was no way I was going to tell them that I'm not appointed because of my brother.' Realising how much it would mean to her family, Georgieva simply pretended that she'd got the job.
'I borrowed money to pretend that I'd been paid on a monthly basis.' The charade lasted for six months, during which time she lavished her family with gifts, including chocolates that she told them she had bought with her first salary. Then the borrowed money ran out.
'I went to talk to my neighbours, who knew my family were very hardworking, decent people and who knew that all I did was read. One of them had a strong position in the Communist Party. And they vouched for me, so I finally got appointed.'
Led by Todor Zhivkov, who was born into a peasant family and served as Bulgaria's de facto leader from 1954 until 1989, the country racked up billions of dollars in foreign debt and its economy was characterised by scarcity. Georgieva had access to few luxuries growing up, and even fewer Western brands. Coca-Cola was a notable exception: in the 1960s, Bulgaria became the first and only Soviet ally to produce the soft drink locally.
Her background is far from the norm for an IMF boss. Christine Lagarde, her immediate predecessor, had a more typical middle-class upbringing, and Dominique Strauss-Kahn, who held the post before Lagarde, was born in Neuilly-sur-Seine, one of Paris's wealthiest suburbs. Georgieva's modest background is a strength, she argues.
'I have personal experience of the damage that bad policies [can inflict on] people and, in that sense, I'm relentless in our engagement with our members. I also care much more deeply than any of my predecessors - and that is not me bragging - about vulnerable countries and low- and middle-income countries.'
Ascending from the lecture halls of Sofia to the top of the IMF in Washington, via the European Commission and the World Bank, requires formidable drive. Georgieva developed her work ethic at a young age. Many Bulgarians were used to sending their children from the city to the countryside during school breaks; there, the pace of life was slower and food less scarce. Georgieva spent hers in Lyubimets, near the Greek and Turkish borders, with her grandparents. After getting up at dawn, she'd clamber on to a donkey-drawn cart to help harvest tobacco. 'My grandparents taught me that you have to work. We all had to pitch in.'
Shortages were commonplace, and Georgieva recalls a time when she visited a store where only bottles of vinegar were on sale. 'Nothing else.' The consequences of the regime were clear. The country's birth rate plummeted, and Bulgaria still has one of the fastest-shrinking populations in the world.
While Georgieva's work ethic was forged in Bulgaria, many of her attitudes and ideas were born in London, she says. Despite securing tenure in Sofia during the mid-1970s, she found herself facing the threat of censure and censorship for talking about capitalism.
Georgieva became fixated on coming to Britain, which she describes as the 'country of economic thought'. She took an intensive five month English course, supplemented by the BBC World Service. 'I had BBC radio on 24/7,' she says. 'Whenever I slept it was right next to me. To this day, I love the sound of the BBC.'
In the '70s, exiled Bulgarian writer Georgi Markov was broadcasting broadsides against Zhivkov on the World Service. Markov's untimely death came in 1978 on British soil. It was a classic spy-thriller murder. He was stabbed in the leg with a poison-tipped umbrella while waiting for a bus on Waterloo Bridge, likely with Zhivkov's blessing.
Nevertheless, Georgieva managed to secure a scholarship funded by the British Council. London in August 1987 was a city full of ideas. Margaret Thatcher had recently been reelected as prime minister, just a few months after British Airways was privatised and listed on the stock market. The London School of Economics (LSE) was a sprawling campus located across the river from the bar where she speaks to me today. It already boasted alumni including financier George Soros, who would 'break the Bank of England' five years later by betting against the pound, and Lee Kuan Yew, the founding father of modern Singapore.
But Georgieva says she was less concerned about whether she could follow in such footsteps than about the latest announcement on the university noticeboard: an invitation to attend an LGBT event on campus. Georgieva was confused. 'I came from a place where if there is something written on the wall, it's an instruction that you need to read and follow. But [being gay] was forbidden. So I looked at it and said to myself, do I need to go there? Because it is on the wall?'
Georgieva soon realised it was not compulsory, and loved the feeling of freedom and choice. With just £21 in her pocket, she opened her first bank account at the age of 34; she saved every penny of her £361 monthly grant that she didn't spend on rent or food, to buy economics textbooks. 'The first thing I bought was an economics dictionary. I still take it with me everywhere I go.'
She returned to her home country a year later with six suitcases, 'one or maybe one and a half with clothes, and the rest had books'. Georgieva also returned with fluent English, and it's this language she still slips into when angry, she says. 'English has really strong, short words to express yourself with.'
But Bulgaria was broke. Thousands gathered in Sofia's Alexander Nevsky Square after Zhivkov was ousted in 1989, following 35 years in power. Georgieva brought friends from London to Bulgaria during this awakening. 'There was nothing in the stores, and when I say nothing, I mean nothing.' Scarcity made the job of entertaining guests difficult. 'For three months before they came I would line up every possible source of food.'
Not that she let this stall her professional drive. After spending time in Fiji as a visiting professor - the first Bulgarian ever to set foot on Fijian soil, she says - by the early 1990s Georgieva realised she wanted out of her native country for good. Using her PhD in economics and environmental protection, she applied for a job at the World Bank, and in 1993, she moved to Washington, DC.
Arguably, no other IMF chief (she is its 12th) had such a tough first year. She started in October 2019, and in the early months of the pandemic was lucky to get four hours' sleep a night. 'There was such incredible uncertainty, so the ability of the Fund to step up was absolutely essential' to support an economy that came to a 'screeching stop'.
In the first year of the pandemic alone, the IMF approved more than 100 loans to 85 countries. The workload took a toll on her staff. 'There is this opinion that we are a bunch of bureaucrats in dark suits and that's all we do,' she says. 'But it is actually a very caring institution that excels at times of crisis.' Georgieva is now used to taking calls at all hours - including at 2am during Covid from a world leader ringing to express thanks for granting them emergency cash.
People think we are a bunch of bureaucrats in dark suits. But the IMF is a caring institution that excels at times of crisis.
She recalls precisely when she last had eight hours' sleep: at the end of April, on a flight from Washington to Riyadh for a two-day World Economic Forum special meeting. 'I can sleep on planes, that's my saviour,' she says. 'It's the reality of my job. Whenever I travel, there are people in Washington that may need me for something and, depending on the time difference, that usually eats into how many hours of sleep I can have.'
A punishing schedule has also had an impact on her family life. She still remembers the time she missed her daughter's birthday: 'I had my suitcase in the office. I was working at the World Bank and then there was a small crisis. And I didn't make it. To this day I remember and my heart is bleeding that I wasn't there.'
Georgieva says she has made multiple sacrifices during her career. 'I don't regret it because I think I did well for the countries and the people I serve. I also did well for women. Is it painful to make that sacrifice? Yes.'
For her daughter, who was born in 1978, the overwhelming emotion was 'bitterness' that her mother's work came before her. The feeling continued 'until she got old enough and mature enough to understand that it is for a reason. And also to understand that for women, it is important they have role models.'
Georgieva also pays tribute to her husband, Kino Kinov, an engineer, who remained in Sofia to take care of their daughter when she was young. 'Without him all this would not be possible. He is a very modest person and very, very proud of me. Very proud that a Bulgarian can reach a position of authority and respect.'
At the age of 70 and about to embark on her second five-year term as managing director, Georgieva says one of her best qualities is that she 'remembers everything good and forgets everything bad'.
There is one near-career-ending recent episode she would surely be glad to forget. Three years ago, Georgieva was accused of having pressured staff at the World Bank to boost China's position in its annual Doing Business report when she was its chief executive. The influential document ranked countries according to how corporate-friendly they were. At the time, many used it to attract foreign investment. A report commissioned by the Bank's ethics committee accused Georgieva of playing a key role in trying to raise China's position in 2018. It alleged that she chastised the Bank's China director for mismanaging the institution's relationship with the country.
Georgieva, who found out about the report at the same time as everyone else, was cleared of playing any 'improper' role. But the scandal caused so much controversy that Doing Business was scrapped altogether.
She brands the whole episode a painful chapter in her life. Many called for her resignation, but Georgieva maintains her innocence. 'It came as a shock out of nowhere and it was so untrue. But again, I look at the positive. It confirmed my view that, as a leader in an organisation, I have a responsibility to nurture a sense that everybody can speak freely. After Doing Business, we actually looked into how we can make sure that our systems work so this cannot ever happen again.'
Georgieva has a clear affection for Britain, but the country has often found itself criticised by the IMF. From the bailout of 1976 to then chief economist Olivier Blanchard's infamous warning that the UK was playing with fire on austerity, and Christine Lagarde's declaration that the consequences of Brexit could only be bad or 'very, very bad', the Fund has not burnished a reputation for impartiality.
In fact, it has consistently underestimated Britain's growth prospects since Brexit. Should the IMF also be prepared to admit mistakes? 'Look, of course, the IMF is a membership organisation. It is impossible to have your members occasionally making errors and the organisation never erring itself,' she says. 'It's not possible. [But] the IMF is a responsible organisation and we actually try to learn from our mistakes. We are very self-critical.'
Her time in London left a lasting impression on Georgieva, in more than intellectual ways. 'You know why I'm so obsessed with colours?' she asks. 'The very first day when I walked around in London my sense was one of freedom, including freedom to wear whatever I like. And I realised I really like to wear colours. My picture of that transition from communist Bulgaria to London is like the film The Wizard of Oz. You have the black and- white version that moves into colours.' Georgieva's social media accounts are awash with jackets in vibrant hues (she has six in her favourite red). She remarks on my own forest green blazer before pointing to an emerald green double-breasted jacket swinging on a rack by the door. Before I know it, she's whipped off her red one and changed into the green. 'We're like twins!' she says, sticking her arm out to compare with mine. 'We have to take a photo.'
Judging by her Instagram, she appears to own hundreds of these jackets. So where does she store them all? Georgieva pauses, then says: 'So, here is a story that I'm not particularly proud of, but it's a true story. I moved house two years ago because I completely ran out of closet space. And now I have plenty. I have a room that has all my jackets.'
She adds, sheepishly: 'In fairness, I had a small house before and I had a very small closet.'
Georgieva is fascinated by the handcrafted globe that's been brought in for the photo shoot. Her first instinct is to hug it – momentarily reaching her arms around it in an embrace - before being urged by her team to step back. 'Who made it?' she asks, commenting on the intricate detail. Its creator Peter Bellerby steps forward to answer questions about the process. Yet her team is wary of any shot that makes her look as though she's towering over it, lest she be depicted as a global financial mastermind.
If anything, Georgieva is concerned that world leaders aren't paying enough attention. She and her colleagues have been pleading in vain with leaders in Washington, Brussels and Beijing to back away from trade wars. But more and more barriers keep being thrown up.
'Fragmentation is throwing cold water on growth that is weak to begin with,' she says. 'And when people are deprived of opportunities to see their lives getting better, and their children's lives getting better, they will be on the streets [protesting] and that weakens our capacity to cope with problems. I am concerned that it will damage the world's ability to handle shocks. We are moving into a more shock-prone world.'
Eighty years after the IMF's creation, it is clear that the world order is in danger of fracturing. The breakdown of geopolitics remains a risk, Georgieva says: 'I am very concerned that we will cause more economic pain as a result of fragmentation than our people are prepared to bear.' Tensions build slowly, but there comes a 'tipping point' beyond which it is too late.
In her view, a focus on trade is misleading. 'Why? Because trade is like a river. When you put an obstacle in front, it tends to go around it. In fact, what we see is that countries are trading more within more aligned groups and they're trading less across these groups.'
Georgieva is worried about our ability to cope with the next global crisis when countries are in it only for themselves. China and the US are drifting apart. Russia's invasion of Ukraine has divided the world. Protectionism is the new normal. The conversation turns back to debt, and her advice during the pandemic: spend by all means but keep the receipts. Was anyone listening? She thinks not.
Central banks around the world are now thinking about cutting interest rates instead of raising them, and Georgieva's fear is that this will usher in more complacency, especially during the world's biggest election year.
'If now the attitude is: "Oh well, interest rates are going down, so the cost of debt service is going to go down, we can bear more," this is going to put a marker [down] that what today is not a debt crisis - it is a very serious problem for a relatively small number of countries that can turn into a serious problem for all of us. Actually if you look at the bulk of borrowing it is in advanced economies.'
The latest IMF data shows debt in the G7 club of rich economies is on course to climb from 86.4 per cent of GDP in 2019 to 101.7 per cent by the end of the decade. In emerging markets the figures are 37.7 and 46.7 per cent respectively. Georgieva is urging all countries to get their houses in order while they can. She ends with a warning. 'If you don't do it, mark my words, it may not happen in the next five years. There will be another shock of the magnitude of those that we have experienced. Once, twice, stepping up borrowing. Can we do a third one and markets still give us a pass? I doubt it.'
