IMF: Empower Civic Groups Against Covid-19 Corruption Public Oversight Key to Monitoring Emergency Funding - Cairo Institute for Human Rights Studies (CIHRS)

The International Monetary Fund should include anti-corruption measures in all its Covid-19 related emergency funding, 99 human rights and good governance groups said today in a letter to IMF Managing Director Kristalina Georgieva. The IMF should take concrete steps to empower and assist independent groups to monitor these funds to help stem government corruption.

“Egypt is asking the IMF for emergency funding, but Egyptians can’t raise concerns about where the money is going without risking arrest,” said Sarah Saadoun, business and human rights researcher at Human Rights Watch. “The IMF should protect Egyptian organizations’ ability to make sure any funds it gives Egypt are used to help the millions at risk of going hungry because of this crisis.”

The IMF has already approved almost US$15 billion in emergency financing to over 65 countries and is considering requests from at least an additional two dozen to help governments whose economies are reeling from the Covid-19 pandemic. Most loan agreements include few or no government commitments to mitigate the risk of corruption, and the Fund appears to be taking a largely retroactive approach that relies on the good faith of governments and the assistance of independent monitoring groups, the organizations said.

Some loan agreements, such as a $147 million disbursement to Gabon, include transparency and anti-corruption measures, including a post-loan independent audit and a requirement to publish procurement plans with the names and beneficial ownership information of companies awarded contracts. This suggests that it is possible to do so without undue delay, and the Fund should apply such measures consistently to all emergency funding.

Moreover, the IMF apparently expects nongovernmental groups to informally monitor the use of its funds as part of an anti-corruption strategy. This would require measures to protect and strengthen groups’ ability to exercise such oversight. The groups are asking the IMF to:

Require government transparency. The Fund should consistently apply transparency and anti-corruption measures to all loans, such as requiring governments to conduct independent audits and publish procurement plans, including the names and beneficial owners of all companies awarded contracts.
Protect civil society groups’ ability to operate. The Fund should require governments to commit to respecting the rights of civil society groups and repeal or amend laws that prevent groups from safely monitoring government spending.
Formally recognize the role of independent monitoring groups. The Fund should formally recognize independent monitoring organizations as stakeholders in loan agreements and establish a channel for them to report allegations of wrongdoing. It should consider engaging select groups as independent monitoring organizations in contexts in which corruption risks are especially high.
Strengthen civil society groups’ capacities. The Fund should conduct virtual training to help build organizational capacity to monitor funds and consider providing willing groups with necessary resources, especially in countries where there are few groups with the resources to monitor government spending.

“It is good that the IMF’s $3.4 billion loan to Nigeria includes transparency requirements, such as publishing the names and owners of companies awarded contracts and a post-loan audit,” said Rev. Fr. Dr. Godswill Agbagwa, founder of CSAAE, a Nigeria-based youth-focused organization. “But nongovernmental organizations like mine need resources to verify the information the government publishes and monitor implementation of projects by government contractors.”

May 4, 2020

International Monetary Fund
700 19^th Street NW
Washington, DC 20431

Re: Anti-corruption and the role of civil society in monitoring IMF emergency funding

Dear IMF Managing Director Kristalina Georgieva:

We are 99 civil society organizations located around the world and we are writing to request that the International Monetary Fund consistently and formally include anti-corruption measures in its Covid-19 pandemic-related emergency funding and take concrete steps to help protect and empower civil society groups to monitor these funds.

We are profoundly aware of the devastating scale of the global economic crisis due to the Covid-19 pandemic, and the urgency of providing governments the funds they need to effectively respond. As organizations that closely monitor corruption and its impacts, we also know that transparency and accountability are key to ensuring the money being disbursed by the IMF is genuinely directed toward protecting lives and livelihoods.

Recognizing this, you urged governments during the Spring 2020 Meetings to “spend what you can but make sure to keep the receipts. We don’t want transparency and accountability to take the back seat in this crisis.” However, most IMF loan agreements include few or no government commitments to mitigate the risk of corruption. Instead, the Fund appears to be taking a largely retroactive approach that relies on the good faith of governments and the close eye of independent monitoring groups.

We appreciate that the urgent need for immediate funding and the nature of the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) – the primary instruments for disbursing emergency funding–constrain the Fund’s ability to implement robust anti-corruption measures. However, some governments that have received funds through these mechanisms, such as Gabon,[1]have committed to transparency and anti-corruption measures, including:

Receiving all emergency funds in a single account with the Treasury and creating a new budget line for coronavirus-related spending.
Publishing a procurement plan that includes the names and beneficial ownership information of companies awarded contracts.
Agreeing to an independent audit within six months of receiving the funds.

The inclusion of these measures in some cases suggests that it is possible to do so without undue delay. The Fund should apply such measures consistently to all emergency funding.

Moreover, as the Fund has acknowledged, even these measures would be insufficient to adequately ensure accountability because emergency funding is provided in lump-sum payments. In our communications with the Fund, both staff and board members have emphasized that they intend for civil society groups to play a vital role in filling that gap by closely monitoring government spending and communicating their concerns to the IMF.

We are grateful that the Fund recognizes the crucial role civil society organizations play in holding their governments accountable, but this is a stopgap measure in the absence of more robust anti-corruption monitoring efforts by the IMF. It would also be imprudent for the Fund to rely on our oversight role without taking concrete steps to protect and strengthen our ability to effectively monitor these funds. Many of our groups work in countries where government spending is opaque, auditors do not exist or are not independent, and authorities do not tolerate criticism. Even where they can operate safely, many groups lack the technical capacity and resources to effectively monitor the billions of dollars in funding that the IMF is disbursing.

To protect and strengthen civil society monitoring of emergency funding, we urge the Fund to take the following measures:

Require transparency.

Monitoring groups are neither law enforcement nor the government’s lender, both of which have authority to investigate and control the funds. The Fund should consistently apply transparency and anti-corruption measures to all loans, such as requiring governments to conduct independent audits and publish procurement plans, including the names and beneficial owners of all companies awarded contracts.

Protect groups’ ability to operate.

Numerous countries have laws that limit freedom of association and expression in ways that undermine the ability of civil society groups to safely operate or effectively monitor IMF funds. For example, Sri Lanka has ordered police to arrest those who criticize government officials involved in the coronavirus response.[2] In other cases, there is no law or formal order explicitly prohibiting criticism of government policies, but officials nevertheless retaliate against those who criticize them. The Fund should require governments to commit to respecting the rights of civil society groups and repeal or amend laws that prevent groups from safely monitoring government spending.

Formally recognize the role of monitoring groups.

Monitoring groups can provide the Fund with valuable information regarding government spending, but they need a safe and effective channel to do so. The IMF should formally recognize independent monitoring organizations as stakeholders in loan agreements and establish a channel for them to report allegations of wrongdoing. It should consider engaging select groups as independent monitoring organizations in contexts where corruption risks are especially high.

Strengthen groups’ capacities.

The IMF’s unprecedented levels of spending, and the importance of the funding in light of the pandemic’s economic impact, has made monitoring government spending of IMF funds a new priority for many of our organizations. At the same time, the economic crisis means that many of our groups have even fewer resources than usual to operate. The Fund should conduct virtual trainings to help build organizational capacity to monitor funds and consider providing willing groups with necessary resources, especially in countries where there are few well-resourced groups monitoring government spending.

You opened this year’s Spring Meetings by noting that extraordinary times call for extraordinary action. The Fund should apply the same creativity and sense of urgency it has shown to support governments to help civil society groups ensure IMF funds go to the people who need it most.

We would be happy to meet with you to discuss these issues in more detail and would appreciate learning what steps you have taken in this regard.

Sincerely,

The signatures: