Will an IMF Loan End Equatorial Guinea’s Grand Corruption? Part I

Long scorned as a nearly perfect kleptocracy where corruption is unparalleled in its brazenness, Equatorial Guinea announced last November it would end the rampant corruption that has earned it such contempt, issuing a policy note saying it is “firmly committed” to measures to “enhance governance and transparency, [and] reduce corruption.” The note issued not from a newly-installed, reformist government but from the same one that has bled the country dry for three decades. The commitment to honest government is the price the International Monetary Fund is demanding in return for a loan to pull the economy out of a deep, prolonged recession largely caused by the ruling elite’s wholesale looting of the nation’s patrimony.

The Equatorial Guinea loan is not the first time the IMF has conditioned a bailout on anticorruption reforms. In 2015, in return for a four-year $17.5 billion loan, Ukraine was required to overhaul the institutions that investigate, prosecute, and adjudicate corruption cases, prohibit government employees from receiving large gifts, and compel senior officials to disclose their assets. The European Union, other international organizations and governments, and Ukrainian civil society all helped formulate these conditions, and all pressed the government to comply with them. Thanks to this concerted pressure, it is; and while Ukraine today is hardly corruption free, it is making steady progress in bringing corruption to heel.

Equatorial Guinea’s promises to the IMF appear in a policy paper titled “Good Governance and Anticorruption Action Plan” (Spanish version; English version). It there pledges not only to enact a slew of new anticorruption laws but to enforce them as well. But unlike Ukraine, Equatorial Guinea has no powerful neighbors demanding it comply with these promises, no strong, independent civil society organizations lobbying for them, and no vibrant, free press following its progress in realizing them.  Like most corrupt countries, it is run by a thuggish, repressive regime that locks up its opponents, or worse, and cares nothing for its standing in the international community or its citizen’s well-being.  The chances the government will honor the IMF loan covenants are thus much lower than they were in Ukraine. Close observers of the country expect the government will enact measures that look good on paper but are never enforced.  And then claim it has done what it promised.

The international anticorruption community must not let this happen. Given its power as lender of last resort to bankrupt governments, the IMF’s decision to enter the anticorruption fight is of paramount import. If, against all predictions, Equatorial Guinea complies with the loan conditions, it will mark an extraordinary victory in the battle to control corruption. If it does not, and the IMF cancels the loan, the result will be equally important.  It will put other corrupt governments on notice that if they want the IMF’s money, they must reform.

As in Ukraine, governments, civil society organizations, and anticorruption activists must vocally and vigorously press Equatorial Guinea to meet the loan’s conditions.  They should also leave no doubt, with either the government or the IMF, that if the Equatorial Guinea fails to do so, they will demand the loan be cancelled. That “substantial compliance,” delays, or any of the other excuses governments use to justify a failure to comply with an IMF loan condition will not wash.

What the anticorruption community can do to pressure Equatorial Guinea to comply with the loan’s conditions — and if it does not, what it can do to ensure the IMF cancels it – will be discussed in part II of this post.

1 thought on “Will an IMF Loan End Equatorial Guinea’s Grand Corruption? Part I

  1. Pingback: ¿Acabará el préstamo del FMI con la gran corrupción en Guinea Ecuatorial? Parte I. Richard Messick. GAB | The Global Anticorruption Blog | asodeguesegundaetapa.org

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