Integrity in IMF COVID-19 financing

Introduction

As economic crises followed the spread of the COVID-19 pandemic in the early months of 2020, many governments appealed to the International Monetary Fund for financial support. At the time of writing, the IMF has disbursed over $100 billion USD around the world. [2] Whilst this funding is urgently needed, emergency buying brings heightened risks of corruption and financial mismanagement. [3]

Much of this support was distributed through two financing mechanisms, the Rapid Credit Facility and the Rapid Financing Instrument, which do not impose strong conditions on governments before funds are released. This is for good reason: speed in disbursing funds was crucial so that governments could confidently procure medical equipment. Nevertheless, quick disbursement also made it a challenge to put safeguards in place against graft and leaks in the fiscal pipeline.

Governments – in most cases via their finance ministries and central banks – were therefore asked to commit to a range of policies in letters of intent (LOIs) to the IMF as a precursor to receiving the funds. In a new exercise for the IMF, countries were asked to ensure transparency in their pandemic-related spending by implementing measures on publishing information on emergency procurement, including details of beneficial owners of suppliers.

At a minimum, this would involve proactively publishing the details of contracts awarded during the pandemic, including the names of suppliers and details of their beneficial owners. For example, the Ugandan government said that:

‘we commit to (i) publishing, once they are signed, documentation on the government’s website of large procurement contracts—defined as contracts above Ush500 million for works contracts, and above Ush200 million for goods and services— of UGANDA INTERNATIONAL MONETARY FUND COVID-19 expenditures, together with the names of awarded companies and their beneficial owners.’ [4]

The connection between procurement transparency and beneficial ownership information is crucial: with information on suppliers and contract values, it is possible to reach conclusions on where contracts are being concentrated and whether the government is getting value for money. Without beneficial ownership information, however, it is much more difficult to determine any possible conflicts of interest, whether companies connected to powerful people (i.e. within government) are the ones winning the contracts, or ensure questionable or unreliable suppliers are not re-engaged under another name. It is very important, therefore, that the IMF took this opportunity to explicitly link procurement and beneficial ownership transparency in their discussions with governments. [5]

Now that the world is over a year into the pandemic, it is important to ask how well governments met these commitments, and how ambitious they were in the first place. Between January and March 2021, the Open Contracting Partnership and Open Ownership partnered with Oxford Insights, researchers and government officials in eleven countries to answer these questions. We spoke to stakeholders in:

• Afghanistan;
• Bolivia;
• Ecuador;
• Honduras;
• Malawi;
• Moldova;
• Nepal;
• Nigeria;
• the Kyrgyz Republic;
• South Africa; and
• Uganda.

Broadly, we asked:

• How ambitious are each country’s commitments?
• How thoroughly have their commitments been implemented?
• What are the blockers to implementation?
• How timely, accurate, and complete is the information that has been published and what is its quality level?
• How strong are the accountability mechanisms when false or inaccurate information is supplied?
• How are stakeholders using published information, and which sectors are they in?

Here, we present our findings and recommendations. It is important to be aware that while the specific scope of this work was to examine commitments made during an emergency, many of the recommendations can also be applied to the wider practice of IMF commitments and progress in open contracting and beneficial ownership.

Next page: Summary of findings