Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, sent a letter to Janet Yellen, the Secretary of the United States Treasury, requesting that the U.S. Treasury work with the International Monetary Fund (IMF) to better combat corruption. In the letter, Ranking Member Waters emphasizes the harm that corruption poses to a government’s ability to lift itself out of poverty and urges the IMF to adopt a strong focus on anti-corruption efforts in individual countries to increase global and regional economic stability.
The IMF is an international organization that provides financial assistance programs to countries in crisis, surveillance of the international economy, and technical assistance to help its 190 member countries formulate and implement sound economic policies. The United States is a founding member of the IMF and the largest financial contributor, and Congress shapes participation of the United States in the IMF by providing oversight, appropriations, and other legislation.
“I am writing to request that you work with the International Monetary Fund (IMF) to more effectively combat corruption by leveraging the governance tools in its lending programs. Corruption undermines economic stability and sustainable development, particularly in heavily indebted nations with challenging governance environments,” said Ranking Member Waters. “…Open, transparent, and accountable governance has proven to be just as vital to a successful IMF program as other economy reforms.”
See the letter here and below.
The Honorable Janet Yellen
Secretary of the Treasury
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Secretary Yellen:
I am writing to request that you work with the International Monetary Fund (IMF) to more effectively combat corruption by leveraging the governance tools in its lending programs. Corruption undermines economic stability and sustainable development, particularly in heavily indebted nations with challenging governance environments. As an illustration, of the countries that have undergone multiple debt restructurings since 2000, all but one country was at the bottom of the World Bank’s Worldwide Governance Indicators. Those same countries also scored poorly on Transparency International's Corruption Perceptions Index. Countries with only one successful debt restructuring fared better on both governance indicators.
For loans to lift people out of poverty and transform economic conditions, anti-corruption standards in line with the IMF’s 2018 Governance Framework must be integrated into IMF programs in ways that are enforceable. Open, transparent, and accountable governance has proven to be just as vital to a successful IMF program as other economic reforms.
For example, earlier this year the IMF approved a $2.9 billion loan to Sri Lanka in response to its ongoing economic crisis, and the first tranche of $330 million has been released to the country. However, corruption, cronyism, and mismanagement of funds played a significant contributing role to the country’s current economic woes. The IMF itself recently published a governance report on Sri Lanka noting the “...systematic and severe governance weaknesses and corruption vulnerabilities across state functions…” have had negative macroeconomic impacts. The report goes on to recommend a series of immediate and short-term measures the country can take to strengthen governance and help put the country on stronger financial footing.
The recognition of the need for governance reforms in Sri Lanka is a positive step, but this fight against corruption should become a central aspect of all of the IMF's program reviews and economic remediation efforts. By making anti-corruption efforts an integral component of economic remediation, the IMF can improve its outcomes while contributing significantly to global efforts to combat corruption.
The IMF’s anti-corruption efforts in Sri Lanka can serve as a model for current and future responses to program reviews, such as those in Ghana and other nations facing similar economic difficulties. Given the IMF's recent projections of challenging economic conditions ahead, other countries may request restructuring in the near future. Thus, emphasizing anti-corruption measures in IMF programs is both timely and necessary.
We urge the Department of the Treasury to advocate for the IMF to adopt a strong focus on anti-corruption efforts in individual countries to increase global and regional economic stability.
Thank you for your attention to this critical matter.
Sincerely,
MAXINE WATERS
Ranking Member
House Committee on Financial Services
U.S. House of Representatives
CC: The Honorable Patrick McHenry, Chairman, Committee on Financial Services
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