COVID-19 Pandemic has heightened the Importance of stronger Governance

August 7, 2020 6:15 PM

 

 

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 private sector.

Governments are playing a bigger role in the economy and this increases opportunities for corruption.

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 social cohesion.

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 pandemic.

Borrowing countries have committed to (i) 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 corruption.

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.

 

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