Contributor: Marushia Gislén
Moderator: Greg Ip, Chief Economics Commentator, Wall Street Journal
Speakers:
Christine Lagarde, Managing Director, IMF
Abdoulaye Bio-Tchané, Senior Minister of Planning and Development, Republic of Benin
Lea Giménez Duarte, Minister of Finance, Paraguay
Penny Mordaunt, Secretary of State for International Development, United Kingdom
Patricia Moreira, Managing Director, International Secretariat of Transparency International
Over the last few years there has been a growing sense of distrust in public institutions. A key factor fueling this distrust is corruption, which, amongst other things, undermines revenue and reduces the efficiency of public spending. Panelists shared their experiences with successful anti-corruption initiatives and discussed how the IMF can contribute and help to mend the trust divide.
Key Points:
· Transparency. Speakers agreed that transparency of public information is critical to combat corruption. IMF research shows that more complicated and intricate rules are likelier to fuel corruption (Lagarde). Duarte emphasized that policy makers have to prove to the public that spending is efficient, and government data, including salaries, benefits, and expenditures, has to be publicly available.
· Technological innovation has the potential to enhance anti-corruption efforts. The digitalization of payments platforms for public salaries has proven an effective tool to cut cost (Bio-Tchané, Lagarde, Duarte), and speakers agreed that fiscal space can be created by improving procurement practices. However, Duarte emphasized that technology alone will not do it, and that it is important to educate the public and media about how to exploit the available information and technology.
· Ending impunity. Bio-Tchané, Duarte emphasized the importance of punishing corrupt officials, even at the highest level of the executive and judiciary to show the public that no one is above the law. Bio-Tchané noted that appropriate laws often exist, but that implementation is lacking. Duarte noted that the “cleaning process” of the public sector can be incredibly costly politically, and Lagarde noted that a change in government may sometimes impede the work on fighting corruption.
· Role of the Fund. Duarte, Bio-Tchané urged the Fund to be more involved in helping countries fight corruption. Lagarde highlighted the Fund’s TA work to strengthen AML-CFT regulations and standards. Going forward, the Fund will take on a more active role to assess country policies when corruption is deemed macrocritical or when countries request such analysis.
· Externally induced corruption? Lagarde emphasized that the IMF is working to build systems to curb corruption on the supply side and Mordaunt highlighted that DFID is working to help private enterprises deal with local corruption through its Business Integrity Hub. She also emphasized the importance of improving domestic regulation to prevent anonymous companies from buying properties or other assets in developing countries. Duarte said that corruption cannot be only externally induced but is usually domestically driven.
Quotes:
“Corruption and the lack of trust implies that the traditional social contract between citizen and state is broken.” Christine Lagarde
“Corruption can turn a country from being a star, to becoming a falling star.” Lea Giménez Duarte
