Rajika Jayatilake explains how and why the IMF has decided to call out corrupt governments

Recently, the IMF woke up to the fact that poverty in the world is perpetuated by pervasive corruption in poverty-stricken nations. “Corruption prospers in the dark,” says IMF chief Christine Lagarde. The lending institution defines public corruption as the “abuse of public office for private gain.”

In spite of having a 20-year-old policy to handle corruption, the IMF belatedly admitted it has not been doing enough to stem global corruption. Too often, it has vaguely referred to “the need for a level playing field” when what it really meant was that there was too much corruption in a particular country.

IMF research shows that annually, the world wastes at least US$ 2 trillion because of bribery and corruption. Lagarde estimates this to be about two percent of global GDP.

The IMF is introducing an anticorruption campaign alongside financial assistance to restore public trust in institutions that corrupt officials have destroyed. It also aims to reduce income inequality among citizens and raise the living standards of those who are mired in poverty.

With relentless corruption threatening to submerge poor nations and drown every chance for a better life for their citizens, the IMF has been pricked by its conscience to act before it is too late. Lagarde says that the organisation will henceforth become “more intrusive” in a country’s affairs if it spots any corruption in official spending or market regulation.

The IMF will also be more open and evenhanded in ensuring that countries adhere to fiscal integrity, and the rule of law. Governments of developing countries that suffer from rampant corruption will obviously be displeased with this turn of events for it translates into less money going into the pockets of corrupt officials.

However, a few developing countries that are committed to fighting corruption are welcoming the IMF’s latest move. To this end, Paraguay’s Finance Minister Lea Giménez Duarte notes: “It can help make a country a star rather than a falling star.”

The IMF’s decision will also help countries repay loans they have already received. As it is, corruption riddled nations find it impossible to reduce their debt burden and keep borrowing to repay loans. Reducing corruption will ensure that countries can spend on healthcare and education, and also reduce debt.

It will also strengthen the hand of anticorruption activists in developing countries who will now have a powerful international lending organisation backing their hitherto lone struggle in fighting corrupt authorities. As acclaimed author Alan Moore asserts, “people shouldn’t be afraid of their government. Governments should be afraid of their people.”

The IMF’s firm stand on wealthy countries is even more unexpected; it is taking to task developed nations that facilitate the flow of ill-gotten gains from poor countries. It has requested these nations to come forward to be assessed on their efforts to prevent corruption in other countries.

Some penetrating questions include whether these countries would pursue legal action if their domestic companies are found bribing foreign officials; and do they prevent corrupt individuals from poor nations bringing in wealth plundered from their countries?

Up to now, about 10 countries including the US and UK have agreed to be held accountable. And when wealthy nations adhere to high standards of integrity, others are compelled to raise the bar too.

The fight against graft could be bolstered by the millennial generation, which is now playing a role in steering the fortunes of the world. Millennials make up 27 percent of the global population and 58 percent of the world’s millennials live in Asia while 13 percent live in sub-Saharan Africa.

According to research, one in seven millennials categorise themselves as activists and half of them believe that activism is a vital component of who they are.

Recently, many regions around the world have seen youth revolt against the corrupt practices of political leaders. They say that problems like unemployment and a lack of educational opportunities are secondary to corruption. In fact, resolving corruption will address many other issues as well.

As American theologian James Freeman Clarke once declared: “A politician thinks of the next election; a statesman of the next generation.” So by the looks of it, the world – especially the developing hemisphere – appears to be woefully lacking statesmen.

The World Economic Forum (WEF) claims that the US$ 2 trillion wasted on corruption doesn’t really reflect the lost opportunities in terms of less investment and tax evasion. It notes that by investing 116 billion dollars of the money wasted on bribes, global hunger could be wiped out while US$ 8.5 billion of it could eradicate malaria.

Furthermore, a trillion dollars could bridge the world’s infrastructure gap. Therefore, with no corruption, developing countries can someday enjoy the standard of living they now only dream about.

And as Che Guevara once remarked, “if you vote for a corrupt leader because he champions your race or religion, you deserve everything you asked for – crime, robbery, violence etc.”