Saturday, August 01, 2020 / 02:47 PM / By Vitor Gaspar, Martin MUhleisen, and Rhoda Weeks-Brown / IMF Blog / Header Image Credit: Anti-Corruption &
Governance Center - CIPE
"Governments are playing a bigger role in the economy
and this increases opportunities for corruption."
Corruption, the abuse of
public office for private gain, is about more than wasted money: it erodes the
social contract and corrodes the government's ability to help grow the economy
in a way that benefits all citizens. Corruption was a problem before the
crisis, but the COVID-19 pandemic has heightened the importance of stronger
governance for three reasons.
First, governments around the world are playing a bigger
role in the economy to combat the pandemic and provide economic lifelines to
people and firms. This expanded role is crucial but it also increases opportunities for corruption. To help ensure the money and measures are helping the people who
need it most, governments need timely and transparent reporting, ex-post audits
and accountability procedures, and close cooperation with civil society and the
Second, as public finances worsen, countries need to prevent tax evasion and
the waste and loss of funds caused by corruption in public spending.
Third, crises test people's trust in government and
institutions, and ethical behavior becomes more salient when medical services
are in such high demand. Evidence of corruption could undermine a country's ability to respond effectively to the
crisis, deepening the economic impact, and threatening a loss of political and
During this crisis the IMF
hasn't taken its eye off the ball of our governance and anti-corruption work.
Our message to all governments has been clear: spend whatever you need but keep the
receipts, because we don't want accountability to
be lost in the process.
In our lending work, we
have provided quick disbursements to meet urgent needs. At the same time,
enhanced governance measures to track COVID-19 related spending have been part of the emergency financing for countries to fight the
Borrowing countries have
undertake and publish independent ex-post
audits of crisis-related spending and
(ii) publish crisis-related procurement
contracts on the government's website, including identifying the companies
awarded the contract and their beneficial owners.
The IMF also ensured that emergency
resources are subject to the IMF's Safeguards Assessment policy.
Long-term reform beyond the crisis
Governance safeguards for emergency
assistance related to COVID-19 are part of a more comprehensive effort by the
IMF to improve its member countries good governance and efforts to tackle
The IMF has significantly
increased its focus on governance and corruption over the last few years. We
adopted in 2018 an enhanced framework designed to make our work with countries more candid, evenhanded,
and effective. This laid the foundation for our COVID-19 policy and lending
response, where stronger governance matters even more.
We recently assessed our
progress in recent years and published the findings in a staff analysis. Here are the key highlights:
- We speak more candidly and in-depth about governance issues with
countries. Text mining analysis shows that we increased coverage of
governance and corruption issues in our annual assessments of countries' economic health and in our lending programs. Governance-related references
more than doubled in staff reports in the 18 months after the IMF approved
the framework, compared with 2017. In 2019, the IMF discussed governance
with countries four times more than the average over the prior ten years.
Just recently-for instance-our surveillance work has focused on central
bank governance and operations in Liberia, financial sector oversight in
Moldova, and the anti-corruption framework in Mexico. Fund staff are
proposing more concrete governance and anti-corruption recommendations.
- IMF-supported lending programs include specific conditionality
related to governance and anti-corruption reforms, with governance improvements
now being a core objective of many programs.
- We have stepped up technical assistance and training to help
countries strengthen governance and anti-corruption efforts. We aim to
help countries improve governance in areas such as tax administration,
expenditure oversight, fiscal transparency, financial sector oversight,
anti-corruption institutions, and asset declarations for senior officials.
This includes governance diagnostic missions to a dozen countries,
comprising detailed analysis of governance weaknesses based on legal
frameworks and proposing prioritized solutions.
- Moreover, so far, ten advanced economies-Austria, Canada, the Czech
Republic, France, Germany, Italy, Japan, Switzerland, the United Kingdom,
and the United States-have participated in the voluntary assessment of
their national frameworks to limit opportunities for transnational
corruption. The purpose of the assessments, conducted by the IMF, is to
determine the degree to which a country does two things: (1) criminalizes
and prosecutes bribery of foreign public officials and (2) prevents
foreign officials from concealing corrupt proceeds in its own financial
system or domestic economy. The IMF strongly encourages member countries
to volunteer for such coverage in its annual economic health checks.
Curbing corruption requires government
ownership of reforms, international cooperation, and a joint effort with civil
society and the private sector. It also involves political will and the
assiduous implementation of reforms over months and years.
This crisis will sharpen
our focus on governance in the years ahead because of the pandemic's
devastating effects and costs for people and economies. Countries can't afford
to lose precious resources at the best of times, and even less so during and
after the pandemic. If ever there was a time for anti-corruption reforms, it is
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