That in part is because government budgets in more corrupt countries get loaded up with the kinds of spending — like big-ticket projects — that offer greater graft opportunities.
Lagarde said that the IMF includes guidance on anti-corruption measures in its support programs for governments, because “pervasive corruption makes it harder to conduct sound fiscal policy.”
Certain approaches have proven effective in a number of countries: paying civil servants more; setting up special anti-corruption courts; punishing companies for corrupt practices in other countries; and creating special offices to collect taxes from the largest taxpayers, to improve compliance.
But Lagarde also stressed the need for rule of law and firm leadership.
“Prosecuting the powerful ‘big fish’ — which is necessary in order to send a clear signal of commitment and change — can only be achieved if a country’s leaders visibly support the process,” she said.