IMF Enhances Its International Anti-Corruption Role

International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, US, April 21, 2017. (File Photo: Reuters/Yuri Gripas)
International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, US, April 21, 2017. (File Photo: Reuters/Yuri Gripas)
TT
20

IMF Enhances Its International Anti-Corruption Role

International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, US, April 21, 2017. (File Photo: Reuters/Yuri Gripas)
International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, US, April 21, 2017. (File Photo: Reuters/Yuri Gripas)

International Monetary Fund (IMF) decided to enhance its fight against corruption through a more systematic assessment of this phenomenon among member countries by encouraging the fight against corruption in the private sector as well.

During IMF's spring meeting in Washington, IMF's Advisory Committee said on Monday that long-term risks to the global economy tended to be on the downside.

IMF forecast growth this year and next year at 3.9 percent, which is more than the 3.7 percent announced back in October, but warned of long-term threats, including rising debt.

Risks are broadly balanced in the near term, but remain skewed to the downside beyond the next several quarters. Rising financial vulnerabilities, increasing trade and geopolitical tensions, and historically high global debt threaten global growth prospects, indicated the committee.

IMF Director Christine Lagarde confirmed that there was a clear momentum towards dialogue on trade issues during the spring meeting. While IMF is not a commercial entity, it will continue to provide analytical work to explain the role of trade in supporting growth, she said.

At the same time, the fund, which acknowledged on Sunday that it lacked "clarity" on the issue in the past, it adopted a new regulatory framework to allow its teams, through their annual field missions, to assess regularly “the nature and severity of corruption” as of July 01.

"We know that corruption hurts the poor, hinders economic opportunity and social mobility, undermines trust in institutions and causes social cohesion to unravel," according to IMF Managing Director.

In a report published two years ago, the IMF stated that corruption consumes 2 percent of global wealth every year and undermines the equitable sharing of economic growth. The amount of bribes paid in the world alone is between $1.5 billion and $2 billion, according to the fund.

Rich and developing countries are concerned, but it is the most disadvantaged populations who are the first victims because they are more dependent on more expensive public services due to corruption.

Paraguayan Finance Minister Lea Gimenez stressed that corruption is "a multi-level problem involving multiple elements." Despite an official campaign against endemic corruption, Paraguay remains 135th out of 180 countries on the 2017 corruption index of Transparency International.

"We are not supposed to interfere in countries policies, but when it comes to macroeconomic issues ... or when we negotiate a financial aid program, we have full legitimacy to intervene," argued Lagarde.

She pointed out that the development of an aid program could be an opportunity “to put as much pressure as possible” to demand complete information.

IMF has no police power over corruption, but it can exert some pressure through its financial aid programs. It has thus conditioned the release of additional funds for Ukraine not only to the implementation of reforms but also to real progress in its fight against the ubiquitous corruption in the country.

“Corruption thrives in the dark,” added Christine Lagarde, welcoming the fact that IMF teams had obtained the green light from the executive committee “to be more intrusive”.

As a new development, the Fund will target private actors, including multinational corporations, who engage in corrupt practices or contribute to money laundering.

It encourages member countries “to voluntarily lend themselves to an evaluation of their legal and institutional arrangements” as part of the IMF’s annual surveillance missions.

In particular, the institution will examine “whether they criminalize and judge the payment of bribes to foreign officials and whether they have adequate mechanisms to eradicate money laundering and the concealment of dirty money”.

On this point, Lagarde pointed out that the Fund could ask to review the details of contracts of companies, observing that the mining, construction and telecommunications sectors were the most affected by corruption.

Benin's Minister of State for Planning and Development Abdoulaye Bio Tchane said that in order to fight corruption and hold all corrupt accountable, laws and legislation must be implemented, and that "it is indeed possible to implement a policy against corruption."



Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
TT
20

Tesla, Chips, and Banks Tumble as China’s Retaliation Stokes Fears of Widening Trade War

Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)
Tesla’s logo on a building of the Tesla Gigafactory in Gruenheide, near Berlin, Germany, 03 April 2025. (EPA)

US chip companies, banks and oil majors fell sharply on Friday after China retaliated to Trump's tariffs with steep duties, in an intensifying trade war between the world's two largest economies that cast a shadow on global growth.

China slapped additional duties of 34% on US goods, set to go into effect April 10. It also announced curbs on exports of some rare-earths and added several US firms to its export control list and the "unreliable entities" list, which allows Beijing to take punitive action.

The action followed US President Donald Trump's 34% duties on imports from China announced on Wednesday, which triggered a massive market meltdown on Thursday. The latest levies were on top of the 20% tariffs on China imposed earlier this year.

Investors were already fretting over potential supply chain disruptions, price hikes and demand destruction for everything from cars and smartphones to sneakers.

Shares of Tesla and Apple - among consumer tech companies with a large exposure to China - were down 8% and 4%, respectively. While both companies have local production in China, duties on US-imported parts could squeeze margins and force price hikes.

"Several tech companies have established local supply chains in China. Most source components from China already, and hence, disruptions should be controllable, though we do expect price hikes on parts and components not being sourced from China," said Nishant Udupa, practice director at research firm Everest Group.

For Tesla, already in a bruising price war with local Chinese rivals, raising prices would pressure demand further.

"Apple's smartphone sales had already been declining in China for some time, faced with growing, cheaper competition. So, the prospect of steep import duties being imposed is likely to sharply erode sales even further," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Shares of Alphabet, Microsoft and Amazon.com were subdued as they had limited exposure to China.

GE Healthcare's stock slid nearly 13%, following China's export controls on a rare-earth metal that is used in MRI scans. The country's announcement of an anti-dumping investigation into imports of certain medical CT tubes from the US and India added to the worries.

SEMICONDUCTORS

Chip companies are set to face headwinds, too, although US exports a much smaller amount of electronic equipment to China. Shares of Intel, Applied Materials and Qualcomm, all of which count on China for at least 30% of revenue, were down 5% to 8%.

The US exported more than $15 billion worth of electrical and electronic equipment to China in 2024, with most of the value coming from integrated circuits, transistors and other semiconductor devices, according to economic data provider Trading Economics. In comparison, the U.S. imported more than $127 billion in electronic equipment from China last year.

"Semiconductors will feel a greater impact ... We're already witnessing a domestic ecosystem evolve in China, with direct alternatives for every major US semiconductor firm. This trend is likely to accelerate," Udupa said.

NATURAL RESOURCES

Crude prices, already under pressure from an expected OPEC+ oil output hike in May, added to the losses.

Oil majors Exxon and Chevron fell more than 5%. Top oilfield service company SLB dropped 10%, and the biggest US refiner by volume, Marathon Petroleum, fell 6%. Chemicals company DuPont slid 12%.

"The trade war escalated, recession fears rise and consequently oil demand growth is to take a sizeable hit," said Tamas Varga, analyst at PVM.

China is also the largest market for US agricultural products, even as imports of US farm goods dropped last year.

Shares of top grain traders like Archer-Daniels-Midland fell 8% while Bunge was down 6%. Fertilizer firms Mosaic and CF Industries fell 10% and 8%, respectively.

China's tariffs on US soybean exports would increase the cost to local customers, especially animal feed producers, and could prompt the country to source more from Brazil and Argentina, said Morningstar analyst Seth Goldstein.

BANKS

Banks' shares extended their declines from Thursday. The industry has been clouded by fears that a trade dispute could temper consumer confidence, reduce spending, weaken loan demand and pressure fees from advising on deals.

JPMorgan Chase, the biggest US bank by assets, sank 7%. Wall Street titans Goldman Sachs and Morgan Stanley dropped more than 7% each.

MACHINERY

Heavy machinery makers Caterpillar and Deere fell 5% and 4%, respectively, on concerns over demand from one of their largest overseas markets.

China is a major buyer of construction and agricultural equipment and a key player in global infrastructure spending.

RETAIL

Shares of major luxury and footwear firms reversed coursed after Trump said Vietnam's leader To Lam has offered to reduce tariffs on US imports. Ralph Lauren's shares were up 2.5%, while Tapestry rose as much as 3.6%.

Nike gained 4%, Roger Federer-backed On jumped 7.2% and Lululemon Athletica rose 3%. The stocks had initially fallen after retaliatory tariffs by China, a major revenue contributor.