(Image: Shutterstock / OSORIOartist)
With a $1 trillion lending capacity since the COVID-19 outbreak, the IMF has played a leading role in mitigating the economic effects of the pandemic. To date, the Fund has raised more than $83 billion for more than 80 countries through its loan services and debt service relief initiatives.
Maria Emilia Berazategui, Global Promotion Coordinator, Transparency International, explains the importance of implementing anti-corruption measures in IMF loans, namely COVID-19.
Used wisely, these resources give countries the opportunity not only to save more deaths and protect their livelihoods, but also from fitness systems, protect jobs, and stimulate economic recovery. An opportunity that can’t be wasted.
People deserve to be able to accept as true that governments will use the budget in the public interest and that companies will not exploit them. However, threats of corruption do not go away in the event of a crisis. Transparency is not optional, not if we need resources to succeed in the maximum vulnerability. In order to prevent abuse and reduce the threat of corruption undermining the response, it is imperative that countries use these resources in a transparent and responsible manner.
In April, Human Rights Watch, Global Witness and Transparency International called for urgent action through the IMF to ensure that cash delivered to their member countries is used to protect public health, save lives and livelihoods. IMF Managing Director Kristalina Georgieva responded by sending a transparent message to governments receiving COVID-19 monetary assistance, transparency and accountability will not be lost in these difficult times. A message that has been strengthened recently.
Since then, IT has had important investment agreements with its members to oversee the inclusion of transparency and anti-corruption measures.
To identify these measures as components of monetary assistance agreements, we publicly monitor IMF emergency financing data to countries in reaction to the COVID-19 crisis.
To help analysts and anti-corruption activists around the world, we have established a tracker to report the presence (or not) of anti-corruption and transparency measures in the loan agreement, classifying them into nine categories, adding government procurement, effective ownership, expense reports and audits.
We provide key points on the measure, adding the original text of the government’s commitment. In addition, we review press releases issued for a monetary agreement to see if the IMF includes keywords such as (anti-corruption), transparency, and governance in its presentations.
An investigation in the table as of 23 July 2020 shows that 80% of the overall budget distributed through the IMF was allocated to only 10 countries: Chile; Peru; Colombia; Egypt; Ukraine; Nigeria; Pakistan; Jordan, Jordan, Jordan, Jordan Ghana and Tunisia. Just over 58% of all monetary agreements involve express measures for transparency and/or diminishing the threat of corruption.
This is a concerned find. Since the early stages of the pandemic, we have noticed dozens of media reports similar to COVID-19 corruption. This raises critical questions: why, despite the application of the same monetary tools during the same period, so few of them come with express anti-corruption commitments? To what extent are IMF anti-corruption recommendations and governance considerations taken into account in its other IMF member country assessments, such as Article IV reports, when approving loans?
When governments engage in anti-corruption measures, the widely used highs are similar to COVID-19-like expenditure audits (67 investment agreements come with dedications); government procurement (56 financing activities); effective ownership (50 financial envoys).
To enable effective monitoring of their implementation, anti-corruption commitments must be specific, measurable, achievable and time-limited. This is not the case for a significant number of monetary agreements.
Those in Afghanistan; The Bahamas; Bangladesh Benin Gabon and Montenegro contained commitments with delays similar to COVID-19 expenditure audits. Other monetary agreements, such as Guatemala, come with data such as the one on which the expense data will be published.
In other cases, there are a lack of main points that make anti-corruption commitments express and measurable. The Government of the Dominican Republic undertakes to “respect practices in the acquisition and award of contracts … and publish an externally audited report on the costs related to the virus after the crisis has passed.” The lack of clarity about what “practices” and “once the crisis has passed” does not allow us to know what the government has committed to in particular.
In Kosovo, monetary agreements imply language so broad that it is more an expression of goodwill than compromise. In the table, we mark them as “N/A” (without object).
In total, we discovered 47 agreements without a single government commitment similar to the use of the budget in a transparent manner. It is alarming that in this category is the north of Macedonia. Less than five months earlier, the IMF itself had highlighted governance disruptions in the country, however, a loan had been approved without the government’s transparent commitment to address them.
Commitments are passive, but they are just words without concrete actions. IMF member countries can come with express and measurable anti-corruption commitments in their loan agreements, helping the budget succeed in its intended beneficiaries. To ensure that the trillion U.S. dollars will pass to those who want it to the fullest and assistance will save lives, more countries want to make similar commitments, and all will have to turn out that they can move from words to action.
While governments are only making anti-corruption commitments, the IMF can and will have to play a larger role in protecting funds. These measures include:
Emergency financing from the beginning of the crisis, such as immediate credit service and the immediate financing instrument, is characterized by its speed and flexibility, and its limited conditionality. However, the IMF’s reaction to COVID-19 has shown that it is conceivable to come with express promises of government and anti-corruption in emergency lending agreements.
The IMF extends these measures to all countries by incorporating these governance promises and applying them in a similar way to all countries in its 2011 policy. This would help not only save you the misuse of IMF funds, but also address the inconsistency of emergency anti-corruption measures that the IMF itself has recently acknowledged.
The 2011 policy already mentions a number of dedications that countries do, such as the attrition of a safeguards assessment. In order to reduce the threat of misuse of emergency investment in times of crisis, the Fund underlines the need for countries to express the promises of governance as a component of their policy to be applied in a similar way to all countries receiving such investment.
The IMF publishes policies, fact sheets, Article IV reports, and loan agreements, although they are disseminated on its online page and are not easy to use. Finding the situations that countries will have to face in their loan agreements requires a review of long and occasionally technical documents, making it difficult for civil society, the media and researchers to stand firm.
The publication of the COVID-19 Financial Assistance and Debt Service Relief tracker was a positive step by presenting loan agreement information in one place. This should be replicated for issues such as the conditionalities applied to countries in all the IMF lending.
There is a growing recognition of the role civil society organizations (CSOs) play in supporting accountability and in tracking the implementation of the commitments. The IMF must strengthen its efforts to consult with CSO experts before loans are approved, in particular to get ideas on what anti-corruption measures are needed. In Nigeria, civil society organizations have flagged the need for effective protection for whistle-blowers.
The IMF will have to systematically take into account the dangers that its own facilities have known in the past, as well as the contributions of other actors, such as civil society, as discussed in previous points.
Broad and indistinct commitments do not deserve to be accepted. IMF member countries will have to make specific, concrete and lengthy commitments. The language of commitments is vital because it allows citizens, civil society and the IMF itself to hold governments accountable and, as it deserves, to monitor their implementation.
Government procurement, real beneficiaries and audits are key spaces to reduce the threat of corruption. The crisis has highlighted two other spaces to be addressed.
The key government will have to have the monetary and technical resources to fight corruption. At the beginning of the pandemic, foreign agencies have already noticed that COVID-19 affects the national government’s ability to monitor and comply to do its job. It is encouraging that a loan to the Kyrgyz Republic has expressly committed itself to this effect.
Conflicts of interest in decision-making can lead to greater dangers of corruption. Identifying these hazards and equipment, such as transparent disclosure of assets through public officials, is helping to address these dangers.
The IMF said non-compliance with commitments can lead to new conditionalities similar to governance and the opposite fight to corruption under long-term programs and/or advice on applicable policies. The IMF deserves to report publicly and comprehensively on implementation and to have an effect on anti-corruption measures on immediate emergency monetary tools at its spring 2021 meetings.
I have read and agree to the privacy policy
Subscribe to our weekly menu to get the latest news and updates from Transparency International
I have read and agree to the privacy policy