Transparency International's Take on the New IMF Anti-Corruption Framework
By the C|C Whistleblower Lawyer Team
The International Monetary Fund (IMF) recently unveiled its long-awaited framework for “enhanced” engagement with countries on corruption and governance issues. The stated purpose of the new enhanced framework is to ensure that corruption issues are dealt with “systematically, effectively, candidly, and in a manner that respects uniformity of treatment.” This will apply to the IMF’s yearly reviews of its member countries, and also to the conditions which come with IMF lending programs. If properly implemented this new framework could mean a significant shift in the IMF’s engagement with anti-corruption.
That being said, some of the fundamental constraints of the IMF in this area remain in place. As IMF staff have made clear during discussions with civil society organizations, its primary mandate is macroeconomic stability, and it can only address corruption risks when they are severe enough to have a potential impact on the economy. The IMF will continue to avoid interfering in individual enforcement cases, and will not use its findings to publish rankings of its member countries.
Three aspects Transparency International says it will be looking at closely in coming months as the new policy is rolled out are:
- WILL THE IMF PUBLISH ITS BASIC FINDINGS ON CORRUPTION RISKS IN COUNTRY REPORTS? The new framework commits the IMF to a basic assessment of corruption and governance risks in all its member countries. Where it finds these to be severe (‘macro-economically critical’ in IMF speak), it will apply a more in-depth assessment and issue policy recommendations. From an anti-corruption perspective, a summary of the basic IMF assessment in each country report would be a highly valuable resource, including in cases where they consider corruption risks as not severe.
- HOW MANY “SPILLOVER” COUNTRIES WILL THE IMF ASSESS? As the IMF paper recognizes, corruption in one country is often facilitated by weaknesses in the anti-money laundering frameworks of another; what the IMF calls “spillovers”. In 2014, for example, Scottish shell companies played a key part in a $1billion raid on Moldovan banks involving corrupt judges and officials. It cost Moldova around an eighth of its annual GDP, almost bankrupting the economy. In recent assessments, the Fund has not consistently addressed these types of spillover risk.
- WILL THE IMF SEEK INPUT FROM ANTI-CORRUPTION NGOS IN ITS COUNTRY ASSESSMENTS? At the high-level panel which accompanied the launch of the new framework, all participants including IMF director Christine Lagarde stressed the crucial role civil society is playing in fighting corruption. Under the new policy, IMF staff will be tasked with assessing the quality of the legal and institutional framework that is charged with combatting corruption. This is not an area that can easily be tackled during a country visit, nor in which government self-assessments tend to be reliable.
Transparency International says they are already marking their calendars for 2019: what will the IMF have to show for the 1-year anniversary of its new anti-corruption policy? Transparency International