Corruption: A Hidden Tax on Growth

By Vitor Gaspar and Sean Hagan

(Versions in Español عربي中文Français日本語, Русскийعربي)

In recent years, citizens’ concerns about allegations of corruption in the public sector have become more visible and widespread. From São Paulo to Johannesburg, citizens have taken to the streets against graft. In countries like Chile, Guatemala, India, Iraq, Malaysia and Ukraine, they are sending a clear and loud message to their leaders: Address corruption!

Policymakers are paying attention too. Discussing corruption has long been a sensitive topic at inter-governmental organizations like the International Monetary Fund. But earlier this month at its Annual Meetings in Lima, Peru, the IMF hosted a refreshingly frank discussion on the subject.  The panel session provided a stimulating debate on definitions of corruption, its direct and indirect consequences, and strategies for addressing it, including the role that individuals and institutions such as the IMF can play. This blog gives a flavor of the discussion.

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Corruption and Governance

by iMFdirect

In development circles, governance is often a code word for corruption. But Daniel Kaufmann, president of the Natural Resource Governance Institute, says governance is much broader. In this podcast, Kaufmann talks about how good governance can triple a country’s per capita income.

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Under Pressure

Jeff Hayden altBy Jeff Hayden

Between 2004 and 2013, Latin America recorded impressive growth and strong progress on a range of social issues. High commodity prices combined with strengthened economic management and progressive social policies to propel the region forward.

This strength was all the more striking against the backdrop of the 2008–09 global financial crisis, which mired many advanced economies in recession but saw emerging markets, including many in Latin America, power ahead. This led some observers to dub the period the “Latin American decade.”

Now, as the world’s economic leaders prepare to gather in Lima, Peru, in October for the Annual Meetings of the International Monetary Fund and the World Bank, the picture looks quite different.

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Lively Debate on the Dead Sea Shores

By Nemat Shafik

(Version in عربي)

 I’ve been in Jordan this weekend, attending a vibrant meeting of the World Economic Forum on jobs and growth in the Middle East. I participated in a panel on employment with Queen Rania, and I’d like to share some of the ideas generated during that discussion and at the meeting more generally.

The atmosphere was both cautious and optimistic—cautious because of the growing risk of the downturn in advanced economies (particularly Europe) spreading to the region, and optimistic because of the recent political gains in both Libya and Tunisia in particular.

 One of my biggest (and heartening) takeaways was that there were more young people bubbling with ideas and entrepreneurial spirit (ready to take risk) than ever before at this regional forum—which reflects a growing recognition of their current role in the Arab Spring and the role they will have to play in the future as drivers of economic change.

 Creating jobs for the young and growing population in the Middle East and North Africa remains the dominant topic. Here on the Dead Sea, it’s jobs, jobs, jobs that are still on everybody’s mind. And it’s clear that there’s a tension between the high hopes for a better future in the long term and the impatience and frustration with difficulties and challenges in the short term. Continue reading

Blow, Bling and Bucks: IMF Work Against Money Laundering and Terrorist Financing

By Jody Myers

(Version in Français)

Drug traffickers, diamond smugglers, and terrorists’ financiers around the world have one thing in common: they abuse the financial system to “clean” the proceeds they have obtained from their illegal work, or to transfer funds to achieve their destructive aims. The former is known as money laundering and the latter as terrorist financing.

In the United States alone, profits from these crimes are estimated around $275 billion, excluding tax evasion.

Our research shows this dark side of the economy has destructive consequences for a country’s financial stability, economy, and governance.    Continue reading

Tax Matters for Developing Countries

By Carlo Cottarelli

You hear a lot these days—not least from me—about the fiscal problems of advanced economies. But let’s not forget the fiscal problems that low-income countries face, though they are of a different kind.

For all too many low-income countries, government tax revenues are far from enough to meet the needs of their people. Some have made good progress, and this helped them weather the crisis better than many advanced economies—but there is an underlying, quiet crisis of inadequately resourced governments. Continue reading

Africa Is Back

By Dominique Strauss-Kahn,

Managing Director of the International Monetary Fund

In the wake of the global financial crisis, there is a fresh energy in Sub-Saharan Africa–and a broad consensus on the road ahead. Above all, there is the strong sense that Africa’s destiny will be driven by Africans, not by others.

That at least is my initial feeling after two days of dialogue in Kenya with President Kibaki and government officials, civil society leaders and trade unionists, academics and students, and ordinary Kenyans. “Africa is back” is how I described it in a live TV debate in Nairobi with Prime Minister Odinga,  Minister of Finance Kenyatta, Nobel Laureate Wangari Mathai, Transparency International’s Akere Muna and my friend, Bob Geldof. 

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