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)
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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."



Lebanon Hopes to Meet Foreign Bondholders in Coming Year, Finance Minister Says

A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)
A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)
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Lebanon Hopes to Meet Foreign Bondholders in Coming Year, Finance Minister Says

A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)
A view shows Lebanon's Central Bank building in Beirut, Lebanon January 12, 2023. (Reuters)

Lebanese officials hope to meet international bondholders to talk about restructuring debt in the next 12 months but are not planning any meetings at the World Bank/IMF Spring meetings next week, finance minister Yassin Jaber said on Tuesday.

Jaber spoke to Reuters just days before travelling to Washington for the Spring meetings - one of the biggest gatherings for financial policy makers and investors - where Lebanon will seek to show it has made progress on economic reforms to address the underlying causes of its financial crash.

Lebanon's economy began unravelling in 2019 after years of corruption and profligate spending by the country's ruling elite, and tipped into a sovereign default on its $31 billion of outstanding international bonds in March 2020.

Asked whether he planned to meet international bondholders in the next year, Jaber said, "definitely, definitely, this is as they say the elephant in the room."

"You can't escape it in the end. Lebanon is keen to resolve this issue, God willing," he said.

But the country needed to make progress on reforms - including reforming the banking sector and boosting government revenues through reforms to tax systems and customs collection - before it could start talks, Jaber said.

"We wanted, first of all, to do our homework, to put the whole reform process on the right track to get started. You can't have a house in total disorder and then say, 'I want to negotiate,'" he said.

The Lebanese delegation to the spring meetings will be the first outing at an IMF/World Bank meeting for Lebanon's new government, which took the reins in February and pledged to seek a new IMF programme. Jaber said it would be the first time a Lebanese finance minister attends in more than a decade.

Economy Minister Amer Bisat is scheduled to give an outlook on Lebanon's economy at a JPMorgan investor conference held on the sidelines, according to documents seen by Reuters.

The creditor group - which includes the heavyweight funds Amundi, Ashmore, BlackRock, BlueBay, Fidelity and T-Rowe Price as well as a group of smaller hedge funds - has recently appointed a financial advisor in preparation for debt talks.

Shortly after the bondholder group originally formed in 2021, it said it held a "blocking stake" of more than 25% across a number of Lebanon's bonds, making it a critical player in any debt restructuring.

The chunk of the bonds are also held by domestic commercial banks or the Lebanese central bank, which bought $3 billion of debt directly from a previous government in 2019.

Lebanon's bonds trade at deeply distressed levels of around 15-16 cents in the dollar. However, that is a sharp uptick from the single digits they traded in before Israel's military campaign badly weakened Lebanese armed group Hezbollah, long viewed as an obstacle to overcoming Lebanon's political paralysis.

In January, Lebanon's cabinet extended the statute of limitations on legal action over Eurobonds for another three years. Jaber said the move "reassured the bondholders".