MercoPress. South Atlantic News Agency

IMF: Latin America must crack down on corruption and improve governance

High levels of corruption appear to divide the emerging economies of the region from advanced economies which benefit from better rule of law, IMF suggested

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 on 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 broad-based strategy.

“Earlier experiences suggest that a successful anti-corruption strategy would entail strong political leadership, legal and judicial reforms, enhanced transparency and accountability, and above all, stronger monitoring and enforcement,” it said.

“Weak governance and entrenched corruption are weighing on inclusive and sustainable growth in Latin America and the Caribbean.”