Ejustice

MAKE COVID FUNDS TRANSPARENT AND ACCOUNTABLE

Hemantha Withanage, Centre for Environmental Justice

World is expecting some 8  trillions loss due to the Corona outbreak. ADB press release issued on 15 May 2020) state “The global economy could suffer between $5.8 trillion and $8.8 trillion in losses—equivalent to 6.4% to 9.7% of global gross domestic product (GDP)—as a result of the novel coronavirus disease (COVID-19) pandemic.”

Even before COVID has done its impacts the ADB has forecasted the impacts to the economy. Its press release dated April 3 state the Asian Development Outlook 2020, forecasts significant headwinds for Sri Lanka’s economy as it fights the spread of COVID-19, which comes less than 12 months after the terror attacks in April 2019.

Sri Lanka’s economic growth is projected to fall to 2.2% in 2020 and recover moderately to 3.5% in 2021. It further state “With the domestic outbreak of COVID-19, Sri Lanka’s growth projection comes with significant downside risks—growth could be lower by another 1.0 to 1.5 percentage points, depending on the severity and the duration of domestic infection. However, quick measures to contain the domestic spread of the virus and policy action to provide relief to those adversely affected could mitigate the fallout.”

The Asian Development Bank (ADB) has allocated a $600,000 grant from the Health System Enhancement Project to the Government of Sri Lanka to finance preventive and response efforts to fight a potential novel coronavirus (COVID-19) outbreak in the country. 

The World Bank’s Board of Executive Directors approved the $128.6 million Sri Lanka COVID-19 Emergency Response and Health Systems Preparedness Project to help the country prevent, detect, and respond to the COVID-19 pandemic and strengthen its public health preparedness. The project includes a $35 million loan from the International Bank for Reconstruction and Development (IBRD) through the World Bank Group’s COVID-19 Fast-Track Facility and a $93.6 million credit from the International Development Association (IDA), the World Bank’s concessional credit window for developing countries. The Ministry of Health and Indigenous Medical Services will implement the project with support from United Nations agencies and other stakeholders engaged in emergency response, prevention, and readiness.( https://www.worldbank.org/en/news/press-release/2020/04/01/world-bank-fast-track-support-covid19-corona)

Meanwhile,  China has  granted Sri Lanka a concessionary loan of $500 million, to combat COVID-19. They also announce that they will they will rescue the country and with the government request China first stepped up. The once who donated a large amount of masks, PPE, and test kits  are China Merchants Port Group (CMPort), the parent company of Colombo International Container Terminals (CICT) and Hambantota International Port Group (HIPG); CHEC Port City Colombo  etc. Of course, they have a special interest.

The United States has pledged to spend up to $100 million in existing funds to combat the COVID-19  and the European Union also provided some  EUR 22 million grant to Sri Lanka. Meanwhile the COVID – 19 Healthcare and Social Security Fund‘s balance has now surpassed Sri Lankan Rs. 1 Billion.

COVID funds doesn’t come free. China certainly will benefit from more businesses, and constructions. Last week Government of Sri Lanka  announced that they will bring the Colombo garbage to Aruwakkaru again which was abandoned after the technical faults  and public protests. It seems that more than GOSL, China is interested to get this going as they have a huge claim for the days project was hold due to public protests.

I believe there are other sources as well. Monitoring COVID funds doesn’t seems to have a mechanism in any country. There is no mechanism to find how they spend money.

According to World Bank Blog entitle  “Advancing accountability for special emergency funds to address COVID-19” dated May 6 2020, written by SURAIYA ZANNATH  and SRINIVAS GURAZADA May 06, 2020  “In some countries, these categories of funds are kept fully within the oversight of government systems, while in others they are kept as a trust or managed through other similar arrangements. Under the latter approach, the funds largely remain unrecorded. Since money into them does not constitute government revenues, it bypasses parliamentary budget oversight and government financial management controls and processes. And that opens opportunities for corruption.”  

“The World bank group has proposed few key principles that governments should consider when creating emergency relief funds that are outside the regular government budget.    

Ensure complementarity in expenditure across various sources: A high-level national or subnational decision-making body dealing with the COVID-19 crisis could ensure complementarity of funding between the budget and any emergency funds. Processes need to be in place to ensure that there is no double dipping of funding for the same transaction from multiple sources. For example, having a single budget allocation and release, financial report and audit for expenditure could both sources would help minimize the risk. 

When there is a need for exceptions, protocols also need to be enhanced: For transactions that do not follow regular government processes, appropriate protocols need to be in place for higher-level authorization to minimize risk of waste, fraud and corruption. The details of these protocols need to be communicated clearly.

Financial reporting arrangements should link to outputs and outcomes: The government must commit to publishing how the money from donations is spent.   It will be appropriate to establish mechanisms for reporting the amounts co-financed through the emergency fund at each spending agency level. The total expenditure on COVID-19 from both regular government budget and the emergency fund need to be reported along with output and outcomes.  

Supreme Audit Institutions (SAIs) and private sector auditors can establish credible oversight: There is concern over accountability when an SAI’s mandate does not explicitly require an audit of this category of funds. Appointing the SAI to be the auditor of the emergency fund, where possible, would significantly enhance the credibility of the oversight. Where SAI is not involved, the audit needs to be conducted by a credible external audit firm.     

Civil society can help improve accountability: Civil society organizations can play a crucial role, both as supporting actors as well as monitoring and information sharing bodies. Governments should encourage engagement and dialogue with civil society organizations and citizens openly and transparently, especially when decisions related to the government’s response to the pandemic are involved.”  (SURAIYA ZANNATH  and SRINIVAS GURAZADA May 06, 2020)

Such principles are important to maintain strong institutions to hold leaders and their management of the COVID-19 response accountable. It’s necessary for the government to declare the conditions laid by various agencies when making new fund or converting existing fund to COVID response funds. It requires a transparent and accountable process to spend public money.  If not COVID might end Sri Lanka further deep into the debt trap.(END)

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Reference: https://blogs.worldbank.org/governance/advancing-accountability-special-emergency-funds-address-covid-19

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