War on corruption
There is a worldwide trend against corruption and corrupt practices both in the public and private sectors. The International Monetary Fund has now adopted a framework for enhanced engagement in governance and corruption that aims at a more systematic, even-handed, effective and candid engagement with member countries. The revised good governance guidelines, which take effect on 1st July, follow 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 countries. Under the new guidelines approved by the IMF board recently, the Fund will discuss good governance concerns in all economic reviews of member countries.
The IMF has introduced certain non-discriminatory clauses in the new framework. For instance, the Fund will discuss good governance concerns in all annual economic reviews of the member countries, meaning that no country, whatever its quota strength in the Fund, will be spared this scrutiny. Also, the new policy aims to tackle how rich countries contribute to corruption in the developing world by failing to prevent bribery and money laundering or by allowing anonymous corporate ownership. It has also been made clear that the IMF will not investigate specific instances of corruption. Rather, it will focus on the strength of key economic institutions; fiscal and central bank governance, market regulation, the rule of law and policies on money laundering and countering terrorism financing. This clause is meant to avoid criticism of interference in a countries' internal affairs.
IMF Managing Director Christine Lagarde recently said that "we know that corruption hurts the poor, hinders economic opportunity and social mobility, undermines trust in institutions and causes social cohesion to unravel". However, the IMF officials do not expect the new policy to lead to more stringent conditions on loans, which go to a minority of the Fund's 189 member countries. In this respect, the Fund will also rely on the findings of outside transparency campaigners who have criticised the existence of tax and corporate havens in advanced economies as a conduit for illicit financial flows to and from poorer countries.
As per expert analysis, a fall of 25 notches on a corruption index could cut as much as 0.5 percentage points of a country's annual growth.It is reckoned that the IMF's new guidelines would help minimise the menace of corruption and promote good governance in the member countries to a great extent. Under the new guidelines, not only borrowing poor countries will be closely monitored but the new policy framework will also ensure that the Fund will hold all the members to the same standards - something that the IMF had not always done.
Needless to say, IMF's new policy framework will have a great impact on Pakistan's economy. As we know, many countries inAsia and Latin America are busy working out stringent new anti-corruption reforms at the behest of the IMF to get the latest instalment of the aid package. Pakistan may also be required to approach the IMF for its assistance in the not too distant future if the current account deficit continues to widen and foreign exchange reserves continue to decline at the present rates. The new policy framework of the IMF coupled with the present efforts of NAB and the apex court would hopefully go a long way to reduce corruption and accelerate the growth process. Corruption has badly damaged Pakistan's economy and it is time we took strict measures to eliminate the menace.