International Monetary Fund announces new policy for member states

The International Monetary Fund will address corruption and its impact on economic growth with all its member countries under the newly formed guidelines.

The new policy also tackles how rich countries contribute to corruption in the world by failing to stop bribery and money laundering or by allowing anonymous corporate ownership.

"We know that corruption hurts the poor, hinders economic opportunity and social mobility, undermines trust in institutions and causes social cohesion to unravel," IMF Managing Director Christine Lagarde said in a statement on Monday.

"We have now adopted a framework for enhanced engagement on governance and corruption that aims for a more systematic, even handed, effective and candid engagement with member countries," he added.

Poor governance and corruption depletes economic growth and aggravate inequality, according to the IMF, and the new policy ensures the institutions will keep hold of all the members to the equal standards, something it had not always done.

The new policy is introduced as Ukrainian authorities work to bring in new anticorruption reforms at the orders of the IMF. The revised guidelines take effect from July 1, and follows a recent review of the IMF’s 20-year-old policy framework which concluded that the fund had sometimes employed euphemisms when discussing corruption in member states.

However, IMF officials say they do not expect the policy will lead to more strict conditions on loans. The fund will rely on the findings of outside transparency campaigners who have criticized the existence of tax and corporate havens in advanced economies as a channel for illegal financial flows to and from the poorer countries.

However, IMF will not take on specific instances of corruption. IMF analysis suggests falling 25 levels on corruption index could shave as much as 0.5 per cent of points from country’s annual growth.

(With inputs from agencies)