The IMF’s Grand Anti-Corruption Experiment

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International Monetary Fund headquarters, seen during IMF-World Bank annual meeting in Washington, DC, on October 18, 2019.

© 2019 Yuri Gripas / Sipa via AP Images

The International Monetary Fund (IMF) has justifiably given itself high marks on implementing the anti-corruption framework it adopted two years ago. In an internal review published last week, the IMF celebrates real progress.

But the report and accompanying blog do not fully grasp the fundamental challenge of turning this progress into effective reform, especially when it comes to unwilling governments.

By its own account, the Fund’s old policy meant staff often avoided the issue of corruption entirely, or couched it in euphemisms, even in countries where it contributed to the very problems the loan programs sought to address. Fighting corruption was considered optional, something staff could politely ignore when politically sensitive or embrace when circumstances were ripe, such as when shifts in political power created pressure to demonstrate change.

A program in Ukraine, often heralded as one of the IMF’s proudest anti-corruption achievements, is emblematic of this approach: it was implemented after a new government swept to power following a revolution demanding an end to elite corruption.

The IMF’s new approach frames corruption as an economic problem that staff must systematically assess, discuss, and address if it is distorting the economy. It is a grand experiment in the ability to pursue anti-corruption reform even in the absence of a government’s political will.

Imposing reforms is difficult, and can be problematic; while necessary in the context of corruption, it can be especially challenging since officials charged with implementing reforms may themselves be benefiting from corrupt systems. The propensity for endemic corruption to go hand-in-hand with political repression makes it difficult for the public to exert needed pressure to lend legitimacy to the reforms and hold officials accountable for credibly implementing them.

The IMF has dramatically increased its in-depth analyses, discussions, and conditions related to governance in its reporting and lending – improvements that Human Rights Watch, Transparency International, and others have also recognized. However, experience has shown that these actions alone are not sufficient for effectively reforming unwilling governments.

If the IMF is to succeed over the long term, it needs a strategy to ensure commitments on paper translate into real action.

Two elements are critical: systematically verifying full and accurate implementation of governance and transparency commitments; and actively protecting and strengthening the public’s ability to monitor their government and hold it accountable for its management of public funds.

The IMF should be proud of its progress, but much more needs to be done before declaring victory.