IMF: The Pandemic Calls for Anti-Graft Reforms

Published: 31 July 2020

Covid EconomyCombination of COVID-19 and corruption may be deadly for the economy. (Photo: Gerd Altmann, Pixabay)

By Zdravko Ljubas

The International Monetary Fund (IMF) warned this week that corruption in times of the COVID-19 pandemic is more than just wasted money, and that in fact 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,” the IMF said in its blog published on Tuesday.

Stronger governance is important as governments around the world have both “to combat the pandemic and provide economic lifelines to people and firms,” which, according to the IMF, increases possibilities for corruption.

The fund therefore recommends more transparency in the governments’ work, ex-post audits and accountability procedures, but also close cooperation with civil society and the private sector.

“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,” the IMF said in its April recommendations.

Following the financial deterioration, the IMF believes countries should do their best to prevent tax evasion and “the waste and loss of funds caused by corruption in public spending.”

It also reminded that “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,” as any crisis tests people’s trust in government and institutions, and ethical behavior “becomes more salient when medical services are in such high demand.”

The fund also reminded that the governance safeguards for emergency assistance related to COVID-19 are part of a more comprehensive IMF effort to improve its member countries good governance and efforts to tackle corruption.

“Curbing corruption requires government ownership of reforms, international cooperation, and a joint effort with civil society and the private sector,” said the blog and added that political will also plays an important role in that process.

The crisis caused by COVID-19 should sharpen the fund’s “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 now,” the IMF urged.