IMF: Corruption Hinders Humanitarian Relief to Developing Nations

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  • World Bank updates to enforce gender-based violence rules

By Ndubuisi Francis

The International Monetary Fund (IMF) has restated the defective role corruption plays in denying poor people in developing nations access to humanitarian relief.

The Fund’s Managing Director, Ms. Kristalina Georgieva, stated that corruption is a barrier to poor nations for humanitarian relief, adding that it weakens the impact of governance policies.

The IMF chief spoke at the 9th International Anti-Corruption Conference (IACC) in South Korea with the theme: “Designing 2030: Truth, Trust & Transparency.”

The conference focused on the role of transparency in the fight against pandemics.

Georgieva warned that the world is in a period of mass distrust of government, citing people refusing to respond to Covid-19 measure, even as she quoted a former World Bank Group President, James Wolfensohn, who said: “Corruption diverts resources from the poor to the rich, increases the cost of running businesses, distorts public expenditures, and deters foreign investors.”

She stressed that corruption is a barrier to inclusive development in developing nations.

“It erodes the constituency for aid programmes and humanitarian relief. And we all know that it is a major barrier to sound and equitable development,” she said.

The IMF chief added that focusing on transparency is important in the fight against the pandemic since it has worsened economic recoveries globally.

“Every dime has to be counted for by developing economies” she said.

Georgieva disclosed that the IMF was taking up the role in the fight against corruption, especially during the pandemic.

She stated: “And we have sought to balance the need for accountability and transparency against the need to disburse financing very quickly so doctors and nurses can be paid, and the most vulnerable people can be protected. Some of you may have heard me saying, spend what you need but keep the receipts. Accountability cannot take a back seat in this crisis.

“First, all countries receiving emergency financing from the IMF must accept a safeguards assessment of the central bank. This is an IMF assessment of a central bank’s governance and control framework to ensure that it can manage IMF resources properly.”

According to her, the IMF has six areas where it helps in the fight against corruption, including fiscal governance, financial sector oversight, central bank governance, market regulation, rule of law and anti-money laundering.

“They are fiscal governance, financial sector oversight, central bank governance, market regulation, rule of law and anti-money laundering. We also look at transnational aspects through assessments of national frameworks to limit opportunities for corruption through foreign bribery or laundering of proceeds of corruption.

“And in our work on data transparency, we urge citizens to keep track of how public money, their money is spent. Civil society has an incredibly important role to play in this work, including by helping us all to do better,” she said.

Meanwhile, the World Bank has taken what is considered a step forward in its efforts to combat gender-based violence through a new procurement policy that would effectively ban contractors on a small subset of projects found to violate its rules for two years.

The Chief Policy Officer, Galina Mikhlin-Oliver, told Devex, the media platform for the global development community, that the multilateral financial institution has set “extensive” obligations on contractors related to social risks, and that in the past four years had “ratcheted up requirements” in the procurement process, creating a new standard for what contractors must do to prevent and address gender-based violence.

Mikhlin-Oliver noted that while it is great to have recommendations, “you have to have requirements to also make sure that there is real accountability”, adding that: “Big concern we always have with any of these kinds of policies is that they can disincentivise reporting.”

Elana Berger, the Executive Director, Bank Information Center, stated that the World Bank grappled with how it could do so, and after studying the new gender-based violence contract requirements for nearly two years, looked for a way to “raise the stakes for non-compliance of obligations” and “make sure this is taken very seriously and incentivize contractors to seriously and truly comply with them”.

The result is a new mechanism for about 10 per cent of the bank’s infrastructure projects — those determined to be high risk — which for all contracts starting Janunary 1, 2021 will be subject to the new rules and be more closely monitored.

Any contractor found to be in violation of gender-based violence policies could be disqualified from bidding on World Bank contracts for two years.

It is the first time a multilateral development bank is implementing such a policy, the World Bank said.

The new policy announced is the latest in a series of changes made by the World Bank to reduce gender-based violence in part as a response to a bank-funded transportation project in Uganda, where construction workers were accused of sexual abuse against children and women.

The bank eventually canceled the project and among other response measures, created an independent taskforce to examine its policies and make recommendations for how the bank could improve, including examining contractor accountability.

“In a general sense, it’s a welcome step forward by the World Bank and I hope others will follow suit, ensuring more accountability for gender-based violence,” said Aria Grabowski, Policy and Advocacy Manager, the International Center for Research on Women.