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Photo Credit: IMF (http://www.worldbank.org/en/programs/youth)

The International Monetary Fund (IMF) emphasized the importance of tackling corruption through its #fightcorruption seminar during the Annual Meeting on Sunday, October 15th. The discussion, led by Sean Hagan, the General Counsel at the IMF, highlighted that combating corruption is a vital component for sustaining economic stability, promoting inclusive growth, and maintaining security in society as well as certainty in the market.

The seminar addressed the diverse impact of corruption through the lens of the IMF and touched on lessons learned from effective efforts to combat illicit behavior.

Corruption is both a moral and an economic problem – in many countries, corruption is a major barrier to poverty reduction. Because corruption infiltrates every sector, it creates macro- and microeconomic ripples that manifest as everything from slow growth of gross domestic product (GDP) to a lack of capital or market access for small and medium-sized enterprises (SMEs).

According to Professor Rose Ackerman, the change needed is institutional, that means reforming governance like laws and their enforcement, getting rid of bureaucratic red-tape, and creating ‘one-stop’ shops for public goods and services. Moreover, developing a digitalized system is a promising way to reduce opportunities for corruption. Nigeria’s former finance minister, Ngozi Okonjo-Iweala provided an example of how an e-wallet system saves billions of dollars in fertilizer subsidies in the country. By implementing a cash-free system, it lessens the chance for bribery and other fraudulent activity to take place. Laura Alonso, the secretary of public ethics of Argentina, argued that countries must invest proactively in an open and accountable public sector in order to eliminate corruption.

Another takeaway from the discussion is the importance of cooperation between international institutions in the fight against corruption. Okonjo-Iweala suggested that the multilateral financial organizations need to work on this issue collaboratively. The resources, expertise, and sanctioning capacity of these combined agencies can complement local strategies. Christine Lagarde, the managing director of the IMF, suggested that they are trying to actively counter corruption through their mandate, however due to their limited authority, they too, rely heavily on local enforcement capacity.

What about the private sector? Some panelists argued that change is needed in both the perception of the role of the business community as well as their incentives. There is no doubt that private companies play an essential role in combatting corruption – especially large corporations. Okonjo-Iweala recommended that the private sector implement anti-corruption compliance programs and promote business integrity and ethics.

At the end of the discussion, the panelists agreed that we need to have everyone and every sector onboard to begin tackling corruption. It takes multiple layers and actors working simultaneously to make anti-corruption programs successful. Government and the private sector must work together, creating an open and accountable framework that international financial agencies can support via management tools for public works. The public and private sectors, international organizations, and of course civil society collaborating on interventions is the best hope for seeing any results in the fight against corruption.

Dessy Pramita is the Anti-Corruption/Conflict Taskforce Intern at the Center for International Private Enterprise (CIPE)