Corruption matters macro economically as it is not only the issue of growth but also that of trust, managing director of the International Monetary Fund (IMF) Christine Lagarde said on Monday.
Speaking to Al Arabiya (read the full transcript here) on the sidelines of the ongoing World Government Summit in Dubai, she said the IMF determined six months ago that it was important to identify what it called the vulnerability points.
“We have also found out that the more corruption there is the less trust there is, the less revenue generation there is and the less young people actually believe in the institutions that run their countries,” said Lagarde.
Lagarde estimated the cost of bribery around the world at “anywhere between USD 1.5 trillion and USD 2 trillion, so you are really talking about something, which is significant”, she said, citing the evidence identified in the IMF research.
We have reset growth forecast for oil-exporting countries by 1 percentage point because of recent volatility and the fact that prices since last October have gone down, managing director of International Monetary Fund Christine Lagarde said on Monday.
Lagarde said that the IMF is looking at the region as a whole and generally distinguishes between oil exporting and the oil importing [countries].
“For the oil-importing countries, we have maintained roughly our forecast for this year and next,” she said. Lagarde said oil price volatility has been a source of instability since 2014.
“It was way up then went down and then back up again and in the last few months down by 30 percent,” she said, adding that when governments do their budgeting it’s hard for them to say whether it’s going to be around 60 or closer to 70.
“What we try to take into account is future prices so that we can assess more or less what markets are forecasting in terms of price per barrel depending on the quality of oil so that’s what we are using,” said Lagarde.
She also said that the IMF has a very steady relationship with Lebanon. “While we do not have a program, we are in constant dialog about what they should do in terms of policies,” she said.
“What I have heard Prime Minister Hariri say earlier today is that he is determined to actually implement very radically all the measures that he has put in his government statement,” she said.
Highlighting the Lebanese prime minister’s intended reforms program, she said they include fiscal consolidation, structural reforms, and tackling the issue of electricity prices. “All those things we would love to celebrate as success for Lebanon in a few months,” said Lagarde.
On the risks facing global economy, Lagarde said: “So you have the trade tensions which are still unresolved, the outcome of those discussions between China and the United States is uncertain, the time is short and the problems that they are trying to deal with are monumental”.
She also said the outcome of Brexit remains uncertain and will reduce the growth forecast for that region. “Whether it’s very good or very bad outcome it will be less favorable and more friction than what the UK has had with the rested of the European Union,” Lagarde said.
She also said that it is not so much the growth rate but the job-creating growth that is important.
“At this point in time, you look at the number of young people coming to the markets in the next five years as we talk about 25 million young people coming to markets and those jobs have to be identified,” Lagarde said.SHOW MORE