Published by The Diplomat
Millions of dollars in pandemic relief funding from the IMF have gone missing under the military regime, even while Myanmar battles a surge of COVID-19 cases.
As Myanmar battles to contain a third COVID-19 wave, millions of dollars in pandemic relief funding from the International Monetary Fund (IMF) have gone missing.
Just days before the February 1 military coup, the IMF transferred $372 million to authorities in Naypyidaw to help combat the virus. Eight months later, however, IMF spokesman Gerry Rice said during a press conference that “it’s not possible for the Fund to ascertain whether the regime is using the funds as they were intended, namely, to tackle COVID and support the most vulnerable people.”
A big part of the problem is that the military junta is not as transparent as the previous civilian government. When the IMF awarded an earlier batch of COVID-19 relief funds to Myanmar in June 2020, totaling $356 million, the National League for Democracy (NLD)-led government agreed to disclose any procurement contracts worth more than 100 million Myanmar kyat (about $72,000 at that time) on the website of the Ministry of Planning, Finance, and Industry.
Other conditions included publishing online quarterly reports of all COVID-19 related outlays and an audit by the Office of the Auditor General for Myanmar.
Both loans, totaling over $728 million, were provided under IMF programs for lower-income countries and were specifically designed for “increasing healthcare spending, tax relief measures, and transfers to vulnerable households” in Myanmar.
One third of the money comes from the Rapid Credit Facility, which needs to be repaid in full over 10 years, after an initial grace period of 5.5 years at zero interest. The rest is provided under the Rapid Financing Instrument, with an initial grace period of 3.25 years and then 5 years of repayment at the IMF’s basic interest rate plus an additional service charge.
However, the new regime has published no procurement reports since it seized control. The last one, which appeared on January 29, was put out by the government headed by the NLD, the party led by Aung San Suu Kyi, now under house arrest on charges ranging from breaching COVID-19 restrictions to illegally importing walkie-talkies and corruption. The former government used the IMF funds to purchase gloves, masks, and aspirin, among other items.
The first pandemic-related press release from the planning ministry after the coup mentioned a COVID-19 vaccine fund at state-owned Myanma Economic Bank with balances of 30 trillion kyat (about $22 million at that time) and $178 million, making a total of only $200 million. No mention was made of the remaining IMF funds, totaling about $171 million, received just a few weeks earlier. The ministry did not respond to a request for comment.
The United Nations special rapporteur for Myanmar, Tom Andrews said in July that “the junta must account for the $350 million in COVID aid the International Monetary Fund provided the people of Myanmar just days prior to the coup d’état.”
This is not the first time that Myanmar’s military rulers have faced questions over misuse of foreign aid. In 2009, researchers at John Hopkins University found that they had confiscated funds meant for victims of the devastating Cyclone Nargis, and sold the items in local markets.
Meanwhile, the COVID-19 situation in the country is dire. As of October 17, only 8.5 percent of Myanmar’s 53 million people has been fully vaccinated. The military junta plans on producing vaccines domestically with help from Russia and China, and the regime bought an additional 24 million doses from China.
The infection rate is believed to be much higher than the official numbers, as a lack of hospital facilities forces many victims to look after themselves at home. Cases have been found in 90 percent of townships across the country, and crematoriums are overflowing.
Despite the missing IMF millions, the junta’s leader, Senior General Min Aung Hlaing, has called on the international community to donate more vaccines, and Myanmar is also seeking to tap an ASEAN COVID-19 fund.
The IMF is currently not engaging with the military regime. Talks to double the amount of pandemic aid were suspended after the coup. Myanmar is also barred from accessing $700 million worth of IMF Special Drawing Rights (SDRs).
The IMF released a staggering $650 billion in SDRs to boost the global economy following the pandemic. The previous record stood at $250 billion in 2009 to combat the global financial crisis. Recipients can swap SDRs for specific hard currencies including the U.S. dollar and the Chinese renminbi. Only three member countries are excluded from receiving funds from this facility: Afghanistan, Myanmar, and Venezuela.
“The IMF only engages with countries if the majority of members recognize the government,” said Sargon Nissan, IMF specialist at Recourse, a non-profit group seeking accountability in development finance. “But the IMF does not have a precise mechanism to determine when to disengage with governments, and relies on the international community for this determination.”
The legitimacy of the military junta in Myanmar remains up in the air for the time being. For example, the question of who should represent the country at the United Nations has been put off until November. In the meantime, the current ambassador – who was appointed by the NLD government – continues to denounce the coup.
Christine Schraner Burgener, who stepped down as the U.N. special envoy for Myanmar in late October, ramped up her attacks on the military regime at her final briefing. In the clearest condemnation by the United Nations of the military’s power grab so far, she called for Min Aung Hlaing to step down and return power to the elected government. Similarly, Min Aung Hlaing was uninvited from the three-day ASEAN summit held last week.
Instead of working through the junta, Andrews, the U.N. special rapporteur, has advised the international community to “help facilitate a non-junta, non-political body to coordinate a COVID response initiative.” According to him, the military lacks the capabilities and the public trust to control the pandemic.
A recent poll by the Democratic Voice of Burma, a local media group, found that 59 percent of respondents would not accept a vaccine if it was administered by the junta.
Keel Dietz, policy consultant at Global Witness, a London-based non-profit, said the military has proved that it is “not a good custodian” of COVID-19 relief funds. “We have already seen them weaponize COVID to a significant extent by banning the private distribution of oxygen and arresting doctors,” he said, adding that “there are other channels for aid” that bypass the government, such as humanitarian and civil society organizations.
With millions of dollars in relief funding unaccounted for and the path to fresh IMF funding closed, the military coup is taking an ever-heavier toll on Myanmar’s economy and its people. The kyat lost 60 percent of its value in September alone. According to Reuters, an unidentified U.S. official attributed the economic crisis to the political instability and “gross mismanagement of the economy.”
Save the Children, a humanitarian agency, warned on October 3 that “[w]hile the world’s attention has moved on, a hunger crisis is unfolding in Myanmar.” The World Food Program has estimated the coup could more than double the number of people facing hunger, from 2.8 million to 6.2 million. And to make matters worse, said Schraner Burgener, the country is spiraling into a full blown internal armed conflict.