{
  "title": "IMF Survey : Fighting Corruption Critical for Growth and Macroeconomic Stability—IMF Paper",
  "publication": "IMF News, May 11, 2016",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sores051116a",
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  "summary": "By vigorously reducing corruption, countries can improve economic stability and boost growth and development, according to a new IMF staff paper.",
  "publishDate": "2016-05-11",
  "sections": [
    {
      "heading": "Overview and key findings",
      "content": "- Publication: IMF Survey, May 11, 2016.\n- By vigorously reducing corruption, countries can improve economic stability and boost growth and development.\n- Public corruption is defined as an abuse of public office for private gain and afflicts economies at all stages of development.\n- Corruption is described as “macro-critical”—critical to the achievement of macroeconomic stability, which is at the core of the IMF’s mandate.\n- A recent estimate put the annual cost of bribery at around $1.5 to $2 trillion (roughly 2 percent of global GDP).\n- The economic and social costs of corruption could potentially be even larger."
    },
    {
      "heading": "How corruption hampers economic growth (enumerated mechanisms)",
      "content": "- Weakens the state’s capacity to raise revenue and perform core functions:\n  - Harms the culture of compliance and increases tax evasion.\n  - When tax exemptions are viewed as arbitrary, citizens have less incentive to pay taxes, reducing state revenue and public services, with negative consequences for growth.\n- Inflates costs in public procurement and undermines quantity and quality of public spending:\n  - Funds can be siphoned off through off-budget transactions.\n  - Lowers resources available for public investment and priority spending, aggravating infrastructure gaps and impacting growth.\n- Creates macroeconomic and financial stability risks:\n  - Lower public revenues push countries to rely more on central bank financing, creating an inflation bias.\n  - Corruption weakens financial oversight and stability through poor lending and regulatory practices and weak banking supervision.\n- Raises cost of accessing financial markets and hampers private sector:\n  - Lenders factor in corruption risk, raising costs.\n  - Increases uncertainty for firms and acts as a barrier to entry for new entrants.\n  - Resources are diverted to rent-seeking instead of productive activities.\n- Social and environmental costs:\n  - Reduced allocations for social programs and resources lost through corruption limit human capital build-up.\n  - Weaker, poorly enforced environmental regulations lead to more pollution and excessive extraction of natural resources.\n  - Systemic corruption can lead to political instability and conflict; natural resource abundance can accentuate the situation."
    },
    {
      "heading": "Mitigating strategies and policy guidance (four building blocks)",
      "content": "- Transparency:\n  - Adopt international standards on fiscal and financial transparency.\n  - Ensure transparency in extractive industries given their relative share in many economies.\n  - Support international standards on transparent corporate ownership.\n  - A free press plays a key role in exposing corrupt practices.\n- Rule of law and enforcement:\n  - Ensure a credible threat of prosecution; enforcement must also target the private sector.\n  - In some cases, set up new specialized institutions where existing ones are corrupt.\n  - Establish an effective anti-money laundering framework to minimize laundering of proceeds of corruption.\n- Deregulation and simplification:\n  - Eliminate excessive regulation that creates rents allocated at discretion of public officials.\n  - De-regulation and simplification are cornerstones of efficient anti-corruption strategies.\n  - Ensure an adequate institutional framework is in place when transitioning from state-controlled monopolistic markets.\n- Legal framework and institutional capacity:\n  - A clear legal framework is required, but implementation depends on effective institutions.\n  - Develop a cadre of competent public officials who are independent of private influence and political interference.\n  - Leadership must set a personal example and ensure decisive action is taken when needed."
    },
    {
      "heading": "IMF role and perspective",
      "content": "- The IMF has been actively engaged in helping members design and implement anti-corruption strategies given the potential impact of corruption on macroeconomic stability and sustainable economic growth.\n- The paper, Corruption: Costs and Mitigating Strategies, draws on extensive literature and IMF country experience to provide practical guidance to policymakers.\n- Emphasis on a comprehensive approach: short-term measures with immediate impact must be complemented with preventive measures and strict enforcement.\n\nIMF Survey : Fighting Corruption Critical for Growth and Macroeconomic Stability—IMF Paper (IMF Survey, May 11, 2016).\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Research\n- Read the paper\n- Blog: Corruption: A hidden tax on growth\n- Video: IMF seminar on individual integrity in public sector governance\n- Book: Governance and corruption and economic performance\n- IMF fiscal transparency code\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sores051116a"
    }
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    "Published: May 11, 2016",
    "Publication: IMF Survey, May 11, 2016.",
    "By vigorously reducing corruption, countries can improve economic stability and boost growth and development.",
    "Public corruption is defined as an abuse of public office for private gain and afflicts economies at all stages of development.",
    "Corruption is described as “macro-critical”—critical to the achievement of macroeconomic stability, which is at the core of the IMF’s mandate.",
    "A recent estimate put the annual cost of bribery at around $1.5 to $2 trillion (roughly 2 percent of global GDP).",
    "The economic and social costs of corruption could potentially be even larger.",
    "Weakens the state’s capacity to raise revenue and perform core functions:",
    "Inflates costs in public procurement and undermines quantity and quality of public spending:",
    "Creates macroeconomic and financial stability risks:",
    "Raises cost of accessing financial markets and hampers private sector:",
    "Social and environmental costs:",
    "Transparency:",
    "Rule of law and enforcement:",
    "Deregulation and simplification:",
    "Legal framework and institutional capacity:",
    "The IMF has been actively engaged in helping members design and implement anti-corruption strategies given the potential impact of corruption on macroeconomic stability and sustainable economic growth.",
    "The paper, Corruption: Costs and Mitigating Strategies, draws on extensive literature and IMF country experience to provide practical guidance to policymakers.",
    "Emphasis on a comprehensive approach: short-term measures with immediate impact must be complemented with preventive measures and strict enforcement.",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Research](https://www.imf.org/en/news/search)",
    "[Read the paper](http://www.imf.org/external/pubs/cat/longres.aspx?sk=43888)",
    "[Blog: Corruption: A hidden tax on growth](https://blog-imfdirect.imf.org/2015/11/05/corruption-a-hidden-tax-on-growth/)",
    "[Video: IMF seminar on individual integrity in public sector governance](http://www.imf.org/external/mmedia/view.aspx?vid=4550336329001)",
    "[Book: Governance and corruption and economic performance](http://www.imf.org/external/pubs/nft/2002/govern/)",
    "[IMF fiscal transparency code](http://www.imf.org/external/np/fad/trans/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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