The writer directs Africa programmes at Freedom House
The Covid-19 pandemic has prompted calls to postpone debt payments by low-income countries and eventually forgive much of the debt entirely. Some 300 global lawmakers are asking the World Bank and the IMF to cancel the debt now because delaying payments until the end of the year will not be enough.
Their sense of urgency is justified — the economic impact of the pandemic threatens to be devastating. But if debt relief is to be effective, citizens must be able to see that their governments are spending the money saved in the public interest, including on public health, and hold leaders to account for mismanagement and corruption. No government can be trusted to expend public resources effectively without oversight.
This is where creditors can come in. Creditor nations and international lenders should tie further debt relief to genuine fiscal transparency. The goal is not for creditors to control the spending of funds diverted from debt service, but to allow citizens to judge for themselves how their resources are being deployed.
Critics may argue that it is unfair to ask for such transparency in the face of a crisis, especially if it creates a time-consuming extra hurdle. Yet Covid-19 has already shown that an effective response depends on bonds of trust between governments and citizens. When this confidence is lost, responses to the pandemic can become confused and counterproductive.
A budget is a statement of government priorities, so allowing citizens to see spending plans and track actual appropriations will build faith that elected officials are working in their interests. If there is minimal oversight and governments misuse reclaimed funds, that will further imperil their financial standing and increase the cost of future borrowing.
Creditors should tailor their requests of countries seeking debt relief, depending on the circumstances. At a minimum, government budgets need to be fully in the public domain and easily accessible, especially to independent media. Human rights organisations recently recommended that state spending on Covid-19 be tied to accountability in public procurement, auditing by independent monitors, and strengthening of anti-corruption and anti-money laundering frameworks. Countries should be asked to establish independent spending oversight bodies or join the Open Government Partnership or Open Contracting Partnership.
Some governments have already developed innovative tools for tracking coronavirus expenditures. A website developed by the government of Paraguay allows citizens to visualise and track public expenditures and engage directly with public officials. Non-profit groups are also creating innovative mechanisms and social media campaigns to track health interventions in several African countries. Ideally, the transparency measures requested by creditors would apply across the board, not only to pandemic-related expenditures. Otherwise it would be easy for governments with something to hide to create the appearance, but not the reality, of transparency.
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Low-income countries also owe billions of dollars to private creditors who may have less interest in improved transparency. Saudi Arabia’s finance minister, currently serving as chair of the G20 finance track, recently appealed to private creditors to participate in debt-relief efforts, and other influential leaders should join the call.
Any movement toward linking debt relief to fiscal transparency will require concerted, co-ordinated international leadership, which is painfully difficult to find. But as long as Covid-19 persists in any corner of the world, everyone is at risk. Debt relief that allows low-income countries to devote more resources to fighting the pandemic is urgently needed — and a new commitment to transparency will ensure that the reclaimed resources are used for the common good.
