Only two banks have disclosed any information through the flagship lending transparency scheme of the Institute of International Finance (IIF) and Organisation for Economic Co-operation and Development (OECD). Banks first signed up to the scheme in 2019. The first loan details were finally disclosed on an OECD website in late March 2022, but Credit Suisse and Mitsubishi UFG are the only lenders to have taken part. The revelation about the lack of participation of banks in the scheme is being released during the IMF Spring Meetings, where debt transparency will be one of the themes under discussion.
One of the drivers of debt crisis in lower income countries have been secret or untransparent loans, such as the hidden debt scandal in Mozambique. Banks had previously committed to public disclosure, but the failure of banks to disclose the details of loans through this new transparency scheme means that parliamentarians, journalists and civil society remain in the dark about loan deals, preventing lenders and borrowers from being subjected to scrutiny.
Tim Jones, Head of Policy at Jubilee Debt Campaign, said:
“Multinational banks have had almost three years to implement the principles they agreed in 2019, but only two have done so. This is an embarrassing outcome and proves that the voluntary approach has failed. Any lenders who agree secret loans are complicit when the money is stolen or wasted. Governments, especially the UK, must force lenders to disclose the existence and details of loans, for example by passing laws which say any loan not publicly disclosed cannot be enforced in English law.”
Paula Monjane from the Mozambique Budget Monitoring Forum said:
“The economic crisis triggered by the secret loans has already cost Mozambique $11bn, which could rise to $15bn in time. All lenders must be made to disclose the existence and details of loans to governments, so that how funds are used can be monitored. Those responsible for the secret loans, including Credit Suisse, VTB Capital and Mozambique politicians, must still be held to account for their role in the crisis. But we also need rules to ensure such loans can never be given in secret again.”
The IIF transparent lending principles have consistently been endorsed by the G20 as a key way to make lending more responsible. For example, G20 Finance Ministers on 18 February 2022 said: “We welcome the launch of the joint Institute of International Finance (IIF)/OECD Data Repository Portal and encourage all private sector lenders to contribute data to this initiative.” This was despite the fact that no new data had been disclosed on the portal at that point.
The OECD has been funded by the UK government to create the registry for IIF members to disclose details of loans to governments, particularly 70 lower income country governments. Lenders have committed to disclose details including the repayment profile, a guide to the interest rate, the intended use of proceeds of the loan, governing law and whether there is any collateral attached to the loan.
Large lenders to governments who are members of the IIF but have not disclosed any loan information include HSBC, Industrial & Commercial Bank of China, Mizuho, JP Morgan and Standard Chartered.
Of international bond contracts, 99% are governed by English or New York law. Of lower income countries eligible for the G20 debt relief initiatives, 90% of their bonds are governed by English law.
 The loan data is at https://data-explorer.oecd.org/vis?lc=en&df[ds]=DisseminateFinalDMZ&df[id]=DSD_DEBT_TRANS_COLL%40DF_MICRO&df[ag]=OECD.DAF&df[vs]=1.0&av=true&pd=2020%2C2021&dq=…….&ly[rw]=DD_ID%2CREF_AREA%2CRECIPIENT_TYPE%2CTIME_PERIOD%2CFIN_TYPE%2CCURRENCY%2CINTEREST_RATE%2CINTEREST_RATE_TYPE%2CCLAIM_RANK 39 bond deals and 3 direct loans have been disclosed, all either by MUFG and Credit Suisse. Other banks are mentioned as being involved in these deals, but the data was not submitted by them, and loans those banks are involved in without MUFG or Credit Suisse have not been disclosed.