WASHINGTON: The International Monetary Fund will systematically addresscorruption and its impact on economic growth with all its member countriesunder new guidelines launched on Sunday.
The new policy also tackles how rich countries contribute to corruption inthe developing world by failing to prevent bribery and money laundering orby allowing anonymous corporate ownership.
“We know that corruption hurts the poor, hinders economic opportunity andsocial mobility, undermines trust in institutions and causes socialcohesion to unravel,” IMF Managing Director Christine Lagarde said in astatement.
“We have now adopted a framework for enhanced engagement on governance andcorruption that aims for a more systematic, evenhanded, effective andcandid engagement with member countries.”
Corruption and poor governance sap economic growth and exacerbateinequality, according to the IMF, and the new policy framework ensures theinstitutions will hold all members to the same standards — something ithad not always done.
The new policy comes as Ukrainian authorities work to implement stringentnew anticorruption reforms at the behest of the IMF, which has held up thelatest instalment of a $17.5 billion aid package.
The revised good governance guidelines, which take effect on July 1,follows a recent review of the IMF´s 20-year-old policy framework whichconcluded the fund had sometimes employed euphemisms when discussingcorruption in member states — leaving local officials unclear about IMFconcerns.
And IMF analysis sometimes failed to apply the same standards evenly to allmembers.
Under the new guidelines approved by the IMF board on April 6, the fundwill discuss good governance concerns in all annual economic reviews ofmember countries.
IMF officials however say they do not expect the policy will lead to morestringent conditions on loans, which go to a minority of the fund´s 189members and which already include anti-corruption provisions.
The fund also will rely on the findings of outside transparency campaignerswho have criticized the existence of tax and corporate havens in advancedeconomies as a conduit for illicit financial flows to and from poorercountries.
However, the IMF will not investigate specific instances of corruption.
Rather it will focus on the strength of key economic institutions: fiscaland central bank governance, market regulation, the rule of law andpolicies on money laundering and countering terrorism financing.
IMF analysis suggests falling 25 notches on a corruption index could shaveas much as 0.5 percentage points off a country´s annual growth — amountingto tremendous economic losses over multiple years. – APP /AFP