## BOX 1. THE EBOLA VIRUS DISEASE OUTBREAK ## Source details **Canonical URL:** [BOX 1. THE EBOLA VIRUS DISEASE OUTBREAK](https://www.imf.org/-/media/files/publications/covid19-special-notes/enspecial-series-on-covid19budget-execution-controls-to-mitigate-corruption-risk-in-pandemic-spendin.pdf) ## Other formats - [Markdown version](/-/media/files/publications/covid19-special-notes/enspecial-series-on-covid19budget-execution-controls-to-mitigate-corruption-risk-in-pandemic-spendin.pdf.md) - [Structured JSON version](/-/media/files/publications/covid19-special-notes/enspecial-series-on-covid19budget-execution-controls-to-mitigate-corruption-risk-in-pandemic-spendin.pdf.json) --- ### Overview and impact - The Ebola virus disease (EVD) outbreak of 2014–16 in three West African countries (Guinea, Liberia, and Sierra Leone) and 2017–19 in the Democratic Republic of Congo (DRC) caused more than 13,000 deaths. ### Corruption vulnerabilities and failures observed during the EVD outbreak - Concentration of resources in extrabudgetary funds: - External funds were often managed through extrabudgetary funds removed from budgetary controls. - Examples include the National Ebola Trust Fund in Liberia and the National Ebola Response Fund in Sierra Leone, both managed by makeshift crisis response agencies. - Control of resources by fragmented makeshift crisis response agencies: - In Sierra Leone, 17 temporary entities were established for managing EVD-related funds and initiatives in addition to the existing ministries and district governments. - The supreme audit institution (SAI) identified irregularities in more than 90 percent of spending made by one of these entities, arising from audits undertaken semiannually with reports published about three months after the reporting period. - Makeshift entities challenged accountability: they existed only temporarily, competed with existing ministries, and fragmented coordination with development partners (DPs). - Pushing medical procurement out of centralized controls: - Procurement of some essential materials was left to each health center, which had little bargaining power. - Many suppliers closed; remaining suppliers escalated demands for noncompetitive procurement and payment in cash, although these were prohibited by the public financial management (PFM) and procurement regulations. - In rural Liberia, several health centers had no choice but to accept suppliers’ conditions; the SAI considered such spending illegal and required repayment from the doctors. - Lack of ex post verification of EVD-related spending: - Programs to supply food to quarantined households suffered from weak monitoring; in Sierra Leone the SAI could not identify intended beneficiaries of several disbursements for food support. - Similar DP-supported programs had tracking systems enabling beneficiary verification. - Government cash transfer programs were scattered across several agencies and sometimes opaque (e.g., allowances for joining EVD-related activities); in Liberia the SAI found allowance programs implemented by three agencies did not have any written policy. - As a positive example, in Sierra Leone cash transfer programs to extremely poor households provided qualified beneficiaries with a mobile SIM card and a unique code for the enrolment process, with DP support. ### Key lessons and policy recommendations (drawn from EVD experience and applied to pandemic spending) - Preserve procurement system integrity: - Develop clear guidelines or implementing rules for emergency procurement when emergency clauses in existing legislation are activated to ensure coherent application and avoid post-crisis accountability problems. - Establish ex ante central controls of emergency bulk procurement to reduce supplier price speculation and noncompetitive procurement; centralize emergency procurement under procurement regulators when feasible. - Introduce standardized prices for medical gear vulnerable to price manipulation. - Facilitate ex post controls by publishing all emergency procurement on an e-procurement website; emergency procurement should not be exempted from openness and transparency requirements. - Ensure granularity of information disclosure on all COVID-19 related procurement, at minimum including: (1) any deviation from normal procurement procedures; (2) justification for using non-competitive methods; (3) solicitation and submission of bids; (4) evaluation of bids and contract awards; (5) dates, time, contract prices, description of procured items, and proof of receipts; and (6) identities of contractors and their beneficial ownership information. - Maintain adequate expenditure controls to prevent unauthorized spending: - Apply commitment controls over pandemic-related spending, ideally through the FMIS; where FMIS functionality or coverage is lacking, establish alternative centralized online requisition and authorization processes recorded by the MoF. - Customize commitment controls for medical procurement (see BOX 2 in source for measures), including extending commitment controls to remote hospitals and centralizing authorization of commitments when agencies lack FMIS access. - Enforce approval and recording of commitments and invoices through the FMIS; consider rejecting payment orders without system records of commitments and invoices. - Establish controls over extrabudgetary pandemic response funds: - Create a single fund with oversight arrangements including the MoF to avoid multiple funds or makeshift agencies that weaken accountability. - Place funds under the financial controls of the MoF to centralize expenditure controls and approval of commitments and payments. - Publish granular financial data on the funds in the government financial statements even if extrabudgetary in status. - Strengthen payment authorization through verification of delivery of goods and services, engaging technical experts for inspection when specialized verification is required. - Establish controls focused on invoices and payment processing by entities outside the FMIS, including channeling spending through the budget or centralizing invoice and payment processing at the MoF, or requiring frequent reporting coupled with tranche disbursement systems. - Strengthen transparency of invoice information for major transactions by publishing invoice information for COVID-19-related transactions exceeding certain thresholds. - Eliminate duplicated approval and control steps to streamline processes while maintaining safeguards; distinguish process simplification from relaxing or waiving controls. - Strengthen bank reconciliation to identify irregularities on an ex post basis; prioritize reconciliation of pandemic-related spending and consider additional clerical support where automation is lacking. - Maintain supply chain and inventory management: - Establish centralized control of the medical goods supply chain to concentrate spending controls and reporting into an agency with FMIS access and accounting personnel; obtain specialist health expertise from private sector or DPs when needed. - Develop tracking systems for in-kind support (e.g., e-vouchers, barcoded ID cards, delivery points with program staff) to monitor delivery to final beneficiaries; if IT/logistical capacity is limited, deliver commodities to local community leaders in exchange for beneficiary lists to enable internal and external verification. - Ensure goods intended for free distribution are indelibly marked to avoid theft and sale; publish details of aid-in-kind received and distributed along with verification results as an annex to government accounts or annual aid reports. - Verify pandemic-related transactions through internal and external audits: - Undertake more frequent external audits to verify pandemic-related spending (e.g., Liberia conducted quarterly audits of the Ebola Trust Fund while usual cycle is annual); adjust frequency and granularity of audits as the crisis progresses and share detailed beneficiary information with auditors. - Submit internal and external audit reports to a joint body including government and non-government stakeholders when parliamentary oversight capacity is limited, to provide an additional layer of scrutiny. - Increase transparency of internal audit results when internal auditors undertake verification audits; where internal audit functions are centralized and have capacity, publish internal audit reports on a government website and subject them to scrutiny comparable to external audits. - Reaffirm need for strong PFM and transparency practices: - Transparency throughout planning, identifying, executing, and evaluating pandemic responses reduces misuse and corruption vulnerabilities and improves accountability. *Sources: Ross (2017), Audit Service Sierra Leone (2015), and General Auditing Commission Liberia (2015).* ### BOX 3. ADDITIONAL RECOMMENDATIONS ON TRANSPARENCY AND ACCOUNTABILITY ### PFM measures to address corruption vulnerabilities - Judicious and transparent use of contingency appropriations - Transparent use of emergency spending provisions, reallocations, and virements - Approval of supplementary budgets for new resources that cannot be met within the executive authority - Close monitoring of government cash flows and monitoring - Use of electronic fund transfers and real time gross settlement systems for secure disbursement of funds - Tracking and reporting emergency response measures - Risk assessment and clear accountability for off-budget measures, including loans and guarantees - Consolidation of cash resources into the Treasury Single Account - Use of various digitalization techniques to verify eligibility for cash transfer programs. ### Actions to ensure transparency and accountability in the COVID-19 response - Ensure parliamentary scrutiny and legal authorization of policy measures, thereby ensuring that policy actions are subject to legislative scrutiny and are lawfully mandated. - Specify crisis-related measures in the budget with clear eligibility criteria, which would provide ex ante clarity to implementation efforts as well as facilitate ex post verification of compliance. - Consult with key stakeholders in designing and targeting crisis-related measures, promoting inclusiveness in the design of the response measures but also helping to avoid duplication and omission. - Track all spending through the budget and channel donor funding through the budget, which also helps ensure a comprehensive view of all interventions being implemented. - Apply international standards of transparency to implementing off-budget fiscal measures, the latter being particularly associated with significant fiscal risks. - Inform citizens of crisis-related measures, including their rationale and how to access them; this facilitates outreach to potential beneficiaries and ensures awareness of eligibility. - Report regularly on the implementation of both on-budget and off-budget operations. - Involve civil society in monitoring and the parliamentary oversight of implementing crisis-related measures. *Sources: Notes on Keeping the Receipts: Transparency, Accountability, and Legitimacy in Emergency Responses; Preparing Public Financial Management Systems for Emergency Response Challenges; Managing Fiscal Risks under Fiscal Stress; Government Cash Management under Fiscal Stress; and Digital Solutions for Direct Cash Transfers in Emergencies.* ### BOX 1. THE EBOLA VIRUS DISEASE OUTBREAK ### BOX 1. THE EBOLA VIRUS DISEASE OUTBREAK ### Overview and impact - The Ebola virus disease (EVD) outbreak of 2014–16 in three West African countries (Guinea, Liberia, and Sierra Leone) and 2017–19 in the Democratic Republic of Congo (DRC) caused more than 13,000 deaths. ### Corruption vulnerabilities and failures observed during the EVD outbreak - Concentration of resources in extrabudgetary funds: - External funds were often managed through extrabudgetary funds removed from budgetary controls. - Examples include the National Ebola Trust Fund in Liberia and the National Ebola Response Fund in Sierra Leone, both managed by makeshift crisis response agencies. - Control of resources by fragmented makeshift crisis response agencies: - In Sierra Leone, 17 temporary entities were established for managing EVD-related funds and initiatives in addition to the existing ministries and district governments. - The supreme audit institution (SAI) identified irregularities in more than 90 percent of spending made by one of these entities, arising from audits undertaken semiannually with reports published about three months after the reporting period. - Makeshift entities challenged accountability: they existed only temporarily, competed with existing ministries, and fragmented coordination with development partners (DPs). - Pushing medical procurement out of centralized controls: - Procurement of some essential materials was left to each health center, which had little bargaining power. - Many suppliers closed; remaining suppliers escalated demands for noncompetitive procurement and payment in cash, although these were prohibited by the public financial management (PFM) and procurement regulations. - In rural Liberia, several health centers had no choice but to accept suppliers’ conditions; the SAI considered such spending illegal and required repayment from the doctors. - Lack of ex post verification of EVD-related spending: - Programs to supply food to quarantined households suffered from weak monitoring; in Sierra Leone the SAI could not identify intended beneficiaries of several disbursements for food support. - Similar DP-supported programs had tracking systems enabling beneficiary verification. - Government cash transfer programs were scattered across several agencies and sometimes opaque (e.g., allowances for joining EVD-related activities); in Liberia the SAI found allowance programs implemented by three agencies did not have any written policy. - As a positive example, in Sierra Leone cash transfer programs to extremely poor households provided qualified beneficiaries with a mobile SIM card and a unique code for the enrolment process, with DP support. ### Key lessons and policy recommendations (drawn from EVD experience and applied to pandemic spending) - Preserve procurement system integrity: - Develop clear guidelines or implementing rules for emergency procurement when emergency clauses in existing legislation are activated to ensure coherent application and avoid post-crisis accountability problems. - Establish ex ante central controls of emergency bulk procurement to reduce supplier price speculation and noncompetitive procurement; centralize emergency procurement under procurement regulators when feasible. - Introduce standardized prices for medical gear vulnerable to price manipulation. - Facilitate ex post controls by publishing all emergency procurement on an e-procurement website; emergency procurement should not be exempted from openness and transparency requirements. - Ensure granularity of information disclosure on all COVID-19 related procurement, at minimum including: (1) any deviation from normal procurement procedures; (2) justification for using non-competitive methods; (3) solicitation and submission of bids; (4) evaluation of bids and contract awards; (5) dates, time, contract prices, description of procured items, and proof of receipts; and (6) identities of contractors and their beneficial ownership information. - Maintain adequate expenditure controls to prevent unauthorized spending: - Apply commitment controls over pandemic-related spending, ideally through the FMIS; where FMIS functionality or coverage is lacking, establish alternative centralized online requisition and authorization processes recorded by the MoF. - Customize commitment controls for medical procurement (see BOX 2 in source for measures), including extending commitment controls to remote hospitals and centralizing authorization of commitments when agencies lack FMIS access. - Enforce approval and recording of commitments and invoices through the FMIS; consider rejecting payment orders without system records of commitments and invoices. - Establish controls over extrabudgetary pandemic response funds: - Create a single fund with oversight arrangements including the MoF to avoid multiple funds or makeshift agencies that weaken accountability. - Place funds under the financial controls of the MoF to centralize expenditure controls and approval of commitments and payments. - Publish granular financial data on the funds in the government financial statements even if extrabudgetary in status. - Strengthen payment authorization through verification of delivery of goods and services, engaging technical experts for inspection when specialized verification is required. - Establish controls focused on invoices and payment processing by entities outside the FMIS, including channeling spending through the budget or centralizing invoice and payment processing at the MoF, or requiring frequent reporting coupled with tranche disbursement systems. - Strengthen transparency of invoice information for major transactions by publishing invoice information for COVID-19-related transactions exceeding certain thresholds. - Eliminate duplicated approval and control steps to streamline processes while maintaining safeguards; distinguish process simplification from relaxing or waiving controls. - Strengthen bank reconciliation to identify irregularities on an ex post basis; prioritize reconciliation of pandemic-related spending and consider additional clerical support where automation is lacking. - Maintain supply chain and inventory management: - Establish centralized control of the medical goods supply chain to concentrate spending controls and reporting into an agency with FMIS access and accounting personnel; obtain specialist health expertise from private sector or DPs when needed. - Develop tracking systems for in-kind support (e.g., e-vouchers, barcoded ID cards, delivery points with program staff) to monitor delivery to final beneficiaries; if IT/logistical capacity is limited, deliver commodities to local community leaders in exchange for beneficiary lists to enable internal and external verification. - Ensure goods intended for free distribution are indelibly marked to avoid theft and sale; publish details of aid-in-kind received and distributed along with verification results as an annex to government accounts or annual aid reports. - Verify pandemic-related transactions through internal and external audits: - Undertake more frequent external audits to verify pandemic-related spending (e.g., Liberia conducted quarterly audits of the Ebola Trust Fund while usual cycle is annual); adjust frequency and granularity of audits as the crisis progresses and share detailed beneficiary information with auditors. - Submit internal and external audit reports to a joint body including government and non-government stakeholders when parliamentary oversight capacity is limited, to provide an additional layer of scrutiny. - Increase transparency of internal audit results when internal auditors undertake verification audits; where internal audit functions are centralized and have capacity, publish internal audit reports on a government website and subject them to scrutiny comparable to external audits. - Reaffirm need for strong PFM and transparency practices: - Transparency throughout planning, identifying, executing, and evaluating pandemic responses reduces misuse and corruption vulnerabilities and improves accountability. *Sources: Ross (2017), Audit Service Sierra Leone (2015), and General Auditing Commission Liberia (2015).* ### BOX 3. ADDITIONAL RECOMMENDATIONS ON TRANSPARENCY AND ACCOUNTABILITY ### BOX 3. ADDITIONAL RECOMMENDATIONS ON TRANSPARENCY AND ACCOUNTABILITY ### PFM measures to address corruption vulnerabilities - Judicious and transparent use of contingency appropriations - Transparent use of emergency spending provisions, reallocations, and virements - Approval of supplementary budgets for new resources that cannot be met within the executive authority - Close monitoring of government cash flows and monitoring - Use of electronic fund transfers and real time gross settlement systems for secure disbursement of funds - Tracking and reporting emergency response measures - Risk assessment and clear accountability for off-budget measures, including loans and guarantees - Consolidation of cash resources into the Treasury Single Account - Use of various digitalization techniques to verify eligibility for cash transfer programs. ### Actions to ensure transparency and accountability in the COVID-19 response - Ensure parliamentary scrutiny and legal authorization of policy measures, thereby ensuring that policy actions are subject to legislative scrutiny and are lawfully mandated. - Specify crisis-related measures in the budget with clear eligibility criteria, which would provide ex ante clarity to implementation efforts as well as facilitate ex post verification of compliance. - Consult with key stakeholders in designing and targeting crisis-related measures, promoting inclusiveness in the design of the response measures but also helping to avoid duplication and omission. - Track all spending through the budget and channel donor funding through the budget, which also helps ensure a comprehensive view of all interventions being implemented. - Apply international standards of transparency to implementing off-budget fiscal measures, the latter being particularly associated with significant fiscal risks. - Inform citizens of crisis-related measures, including their rationale and how to access them; this facilitates outreach to potential beneficiaries and ensures awareness of eligibility. - Report regularly on the implementation of both on-budget and off-budget operations. - Involve civil society in monitoring and the parliamentary oversight of implementing crisis-related measures. *Sources: Notes on Keeping the Receipts: Transparency, Accountability, and Legitimacy in Emergency Responses; Preparing Public Financial Management Systems for Emergency Response Challenges; Managing Fiscal Risks under Fiscal Stress; Government Cash Management under Fiscal Stress; and Digital Solutions for Direct Cash Transfers in Emergencies.* --- _Source: https://www.imf.org/-/media/files/publications/covid19-special-notes/enspecial-series-on-covid19budget-execution-controls-to-mitigate-corruption-risk-in-pandemic-spendin.pdf_