IMF calls on Latin America to fight corruption
WASHINGTON: Latin American and Caribbean governments need to crack down on corruption in order to make their economies more durable and the benefits of growth more widespread, the International Monetary Fund said Friday.
High levels of corruption correlate with high inequality and weaker development, the Fund said in an assessment of the region’s economic health. “Weak governance and entrenched corruption are weighing on inclusive and sustainable growth in Latin America and the Caribbean.”
High levels of corruption appear to divide the emerging economies of the region from advanced economies which benefit from better rule of law, the report suggested.
That is most noteworthy in Brazil, where huge graft scandals have brought down top politicians and added to the recent recession. The so-called Odebrecht scandal also contributed to Peru’s slower growth last year, the Fund said. In the future, it said, “Investment could be weaker than expected as uncertainties related to the Odebrecht corruption probe continue.” And Guatemala stands out in Central America with a rise in corruption scandals. The region needs to recognize that this-and its link to violence and weak rule of law-discourages investment and increases business costs, the Fund said. “With increasing public discontent, Latin America now faces a window of opportunity to curb corruption,” the report said.
Tackling it, the Fund admits, is a substantial political challenge, and requires a broadbased strategy. “Earlier experiences suggest that a successful anticorruption strategy would entail strong political leadership, legal and judicial reforms, enhanced transparency and accountability, and above all, stronger monitoring and enforcement,” it said.
Worried over Venezuela
The International Monetary Fund expressed grave concerns Friday over Venezuela’s unending political crisis, seeing no end to the economic downturn and suffering of the population. Venezuela “remains in a full-blown economic, humanitarian, and political crisis with no end in sight,” the Fund said in a report on Latin American economies.
The country’s economy will have contracted by 35 percent by the end of this year from 2014, and the Fund says the country is headed toward hyperinflation, when prices soar uncontrollably every day for a long period. But it said the shortages and political strife is taking a huge toll on the Venezuelan people.
“The main risk to the region relates to the humanitarian crisis and ensuing migration of Venezuelans to neighboring countries,” it said. “The number of Venezuelans arriving in Brazilian and Colombian border towns has been rising sharply as the crisis in Venezuela intensifies.”
“The refugees coming from Venezuela is an unfortunate side effect of the crisis, which is extremely severe,” said Robert Rennhack, deputy director of the IMF’s Western Hemisphere Department.
The refugees, he said, are putting pressure on the social services of neighboring countries. “The (Colombian) government is managing it as well as it can, but it’s a challenge. If, say half a million to a million of Venezuelans enter Colombia, that’s something the government has to deal with and it’s causing much problems.”