Illicit financial flows will unfortunately facilitate the corruption and crime accompanying the coronavirus crisis.
The IMF is playing a leading role in mitigating the economic impacts of COVID-19 and has committed to put its $1 trillion lending capacity toward that end.
“The urgent need to support countries in their efforts during the pandemic makes transparency and accountability in government spending critically important,” said Delia Ferreira Rubio, Chair of Transparency International.
“The crisis requires the IMF to make funds available as quickly as possible, but it shouldn’t abandon its commitment to fighting corruption.
The scale of the crisis raises the risks and dangers of the theft of public money that should be used to save lives and rebuild livelihoods.”
Over 90 countries have already requested emergency assistance, the highest number in the IMF’s 75-year history. Unlike with the fund’s standard programs, emergency funds are generally disbursed in lump sums, with limited, if any, transparency, conditions, or reviews.
More than 90 countries have already requested emergency assistance including through the IMF’s Rapid Credit Facility (RCF), Rapid Financing Instrument (RFI) programs, and Catastrophe Containment and Relief Trust (CCRT). All three of these programs are characterized by their speed and flexibility, as well as limited transparency and conditionality.
Statement by IMF Managing Director Kristalina Georgieva on Nigeria
Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) issued the following statement on the 7th of April, 2020.
“Nigeria’s economy is being threatened by the twin shocks of the COVID-19 pandemic and the associated sharp fall in international oil prices. President Buhari’s administration is taking a number of measures aimed at containing the spread of the virus and its impact, including by swiftly releasing contingency funds to Nigeria’s Center for Disease Control and working on an economic stimulus package that will help provide relief for households and businesses impacted by the downturn.
“To support these efforts, Nigeria’s government has requested financial assistance under the Fund’s Rapid Financing Instrument (RFI). This emergency financing would allow the government to address additional and urgent balance of payments needs and support policies that would make it possible to direct funds for priority health expenditures and protect the most vulnerable people and firms. We are working hard to respond to this request so that a proposal can be considered by the IMF’s Executive Board as soon as possible.”
President Muhammadu Buhari receiving briefing from the Minister of Finance, Budget and National Planning, Zainab Ahmed at the State House, Abuja.
In addition, the foreign assistance associated with relieving the worst of the pandemic is ripe for misappropriation.
Nigeria, whose revenues have tumbled with the fall in oil prices, has asked for $3.4bn from the International Monetary Fund, $2.5bn from the World Bank and $1bn from the African Development Bank, said Minister of Finance, Budget, and National Planning Zainab Ahmed.
Dramatic increases in the amounts and speed of spending, as well as distractions or breakdowns that interfere with oversight mechanisms, can allow powerful actors to take advantage of the crisis for their own benefit. Even at this early stage of the pandemic, there are dozens of media reports of corruption and other criminal activities related to COVID-19 spending.
We wish to highlight the need for the Fund to establish basic measures to ensure that the money received by countries is used in a transparent and accountable manner to reduce the risks of misuse and corruption.
Corruption’s drain on public resources always harms governments’ ability to provide adequate health care, education, and other rights, the groups said. During this crisis, it can mean the difference between life and death; adequate food or hunger; a house or homelessness.
Moreover, the IMF can systematically include basic measures to reduce the risks of mismanagement and corruption without compromising the speed and flexibility the crisis demands.
The organizations proposed four such measures:
- IMF transparency.
The fund should publish all information related to programs on its website as soon as possible and signal its continued commitment to good governance in high-level public statements and private meetings with governments.
- Transparency and Accountability in Public Procurement.
To mitigate risks such as hidden contracts, overpricing, and collusion, governments should be provided with support and commit, at a minimum, to:
(1) publish all public contracts; (2) use open and competitive bidding, and strictly limit the use of emergency non-competitive processes;
(3) publish the names and beneficial ownership information of companies awarded contracts; and
(4) empower anti-monopoly agencies, where they exist, to monitor market conditions in critical sectors to avoid collusion or overpricing.
- Auditing by government and independent monitors.
Governments should commit to make all information on how emergency relief funds are spent available to internal auditors and, as soon as practicable, to independent auditors. Priority should be given to critical areas such as health, public procurement, infrastructure, and social security expenditures.
- Implementing and strengthening existing anti-corruption and anti-money laundering frameworks.
The fund should identify and seek to strengthen gaps in such frameworks, including encouraging G20 states and major financial centers to tackle these shortcomings.
A blind trust triggered by a need to act quickly, exempts transparency on how ‘The Relief funds’ will be disbursed.
It is time to ensure that economic stimulus efforts and money for the pandemic response is insulated from corruption. Proactive efforts to stem illicit financial flows during the era of the coronavirus will save lives.