## Addressing Corruption with Clarity

_IMF News, September 18, 2017_

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**Canonical URL:** [Addressing Corruption with Clarity](https://www.imf.org/en/news/articles/2017/09/18/sp091817-addressing-corruption-with-clarity)

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## Bibliographic details
- Authors: Christine Lagarde
- Published: September 18, 2017

---

### Introduction
- Speech delivered by Christine Lagarde, IMF Managing Director, at the Brookings Institution, Washington, DC, September 18, 2017.
- Event convened policy makers, business leaders, and civil society experts to acknowledge and measure corruption and its economic impact.

### What Do We Mean by Corruption?
- IMF definition: public corruption is the “abuse of public office for private gain.”
- Key observations:
  - Corruption is complex, often involving multiple actors operating in the shadows.
  - Private actors can be direct participants (bribery) or facilitators (money laundering, tax evasion).
  - The “Panama Papers” highlight how facilitators enable corruption to spread across borders.
- Implication:
  - Effective anti-corruption approaches must identify many different dimensions and transnational linkages.

### Why is the IMF Involved and Why Now?
- Rationale:
  - Growing consensus among IMF members that corruption is a macro-critical issue in many countries.
  - Systemic corruption undermines inclusive growth and poverty reduction, erodes business vitality, and limits economic potential.
- Quantified cost:
  - The annual cost of bribery is estimated to be between 1.5 to 2 trillion dollars — roughly two percent of global GDP.[1]
- Illustrative dynamics:
  - Public funds diverted to unnecessary projects can deplete social service coffers (education, health care) and perpetuate inequality.
  - Institutionalized corruption increases distrust in government and reduces foreign direct investment, creating negative feedback loops.
- Public perception:
  - A survey of global youth found young people identify corruption, not jobs or lack of education, as the most pressing concern in their countries.[2]
- Universality:
  - Corruption can impact every nation and take forms from embezzlement and nepotism to terrorist financing.

### How Can the IMF Help?
- IMF Executive Board stance:
  - Took stock of progress and committed to confronting corruption more directly.[3]
  - Agreed members would benefit from increased granular policy advice and candid, even-handed assessment of corruption’s economic impact.
- Methodological needs:
  - Development of new methodologies to better quantify and analyze corruption.
  - Launch of two new anti-corruption research initiatives led by Brookings, the World Bank, the IFC, and partners (noted at the event).
- Practical IMF actions and examples:
  - Transparency and accountability: encourage publication of data on major public investments.
    - Gabon example: after IMF consultation, government committed to publishing data on all major public investments in next year’s budget; by 2020 the budget law will outline financial risks associated with every public company, including those in the extractive sector.
  - Regulatory reform: streamline processes to reduce the number of gate-keepers for permits, fees, and contracts (not necessarily deregulation).
  - Legal and institutional strengthening: focus on enforcement institutions (police, public prosecutors, judiciary).
    - Ukraine example: IMF-assisted comprehensive review of national corruption led to reforms including a national anti-corruption bureau; investigators need increased authority and prosecutors must be empowered to bring charges in an anti-corruption court.
- Implementation challenges and realism:
  - Cultural and institutional change takes time; policies can take years to become effective.
  - Some governments view corruption as political rather than economic and may be reluctant to engage.
- Commitment:
  - IMF commits to speak about corruption with clarity and to offer tools to help members do more going forward.

### Conclusion
- A coordinated global effort to stop corruption can increase prosperity and improve citizens’ lives.
- The speech closes with the metaphorical reference: “I think this is the beginning of a beautiful conversation!”

*By Christine Lagarde, IMF Managing Director; Brookings Institution, Washington, DC; September 18, 2017.*

---


## References

- [Christine Lagarde](https://www.imf.org/en/About/senior-officials/Bios/christine-lagarde)
- [Gabon and the IMF](http://www.imf.org/external/country/GAB/index.htm)
- [Panama and the IMF](http://www.imf.org/external/country/PAN/index.htm)
- [Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)
- [The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [Corruption: Costs and Mitigating Strategies](http://www.imf.org/external/ns/cs.aspx?id=353)
- [The Role of the Fund in Governance Issues (August 2017](https://www.imf.org/en/Publications/Policy-Papers/Issues/2017/08/01/pp080217-the-role-of-the-fund-in-governance-issues-review-of-the-guidance-note)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2017/09/18/sp091817-addressing-corruption-with-clarity_