Dissolve corruption to bolster economy, says IMF chief
dubai — To break the potential downward spiral caused by the onset of the fourth industrial revolution, the world needs political determination for the common good, according to Christine Lagarde, managing director of the International Monetary Fund (IMF).
“We need a strong willingness to deal with the change head on. All parties, governments need to come to the table to resolve the issues related to four key areas: trade tensions, financial tightening, the uncertainty surrounding Brexit, and the accelerated slowdown of China’s economy,” she said.
In a conversation at the World Government Summit 2019, Lagarde said the economy is growing at a slower pace than normal because of these “four clouds”.
Looking to the future with what she described as “desperate optimism”, Lagarde said that with the right focus, things will settle and the economy will pick up.
“When too many clouds form, it only takes one bolt of lightning to stop a storm. So countries, prepare yourself, implement better governance and transparency, so if a storm hits you are strong and solid at home.”
Identifying “governance and transparency” as the key factors to better economic growth, Lagarde said one issue that needs to be addressed is dissolving corruption.
“Corruption has a huge impact on growth. It corrodes trust and trust is at the heart of economic relationships. The more corruption, the slower the growth. Any leader interested in growth needs to make sure good governance is in place.”
And with technology now aiding transparency and communication of information, she said “Mr Nobody knows a lot about you, your state and how a budget is organised”. And failure to take that into account will be the demise of a country’s economy.
“People will have an understanding and information about your practice and if they feel that the trust broken, it will matter. It will impact your growth.”