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Challenge of Public Sector Corruption in Developing Countries
Corruption has a highly damaging effect on many developing countries. We examine these effects, the importance of public financial management (PFM) reforms and the contribution required from international development agencies.
Revelations in the Panama Papers released earlier this month have focused international attention on the hidden financial structures that facilitate the transfer of assets obtained through both legal and criminal means to offshore tax havens.
Developing countries can ill afford the cost and the collateral damage arising from corruption. Western nations are linked to corruption in developing countries through their roles as regulatory partners, aid donors, potential trading partners and active participants in bribery.
Does PFM have an impact on corruption?
PFMConnect has examined the consequences of corruption and its impact on PFM performance.
This work suggests that the level of corruption relates strongly to government effectiveness and economic performance and thatPFM reform is relevant to combatting corruption.
We consider that good PFM practice is likely to be beneficial to the advancement of good public service delivery and economic performance in developing countries.
Reforms to combat corruption
PFM reforms must be tailored to local drivers of corruption. They must typically embrace improved public sector procurement practices and higher internal audit standards, greater transparency and more extensive public engagement and press freedom in regards to PFM issues. Other public sector reforms including improved public sector employment practices, strengthened judicial systems and reduced bureaucracy can also support anti-corruption efforts. So too is privatisation of some state services where undertaken with appropriate safeguards.
Business interests also bear some responsibility in promoting anti-corruption policies.The UN Convention against Corruption demands that the payment of bribes be treated as a criminal offence in the home countries of offenders.
The role of development partners
Development partners such as the World Bank have an important role in addressing corruption by making reform programmes more cohesive, establishing appropriate incentive frameworks and identifying reform opportunities. We believe that the clamour for effective action cannot be ignored but it is a long haul.
Read PFMConnect's blog to get the full picture. The blog is now available at http://blog-
Note: PFMConnect is a consultancy designed to support the development of good standards of public financial management in order to improve public service delivery, extend public accountability, encourage local business development and combat corruption. Its work is principally centred on developing countries, working in cooperation with governments and other stakeholders.
For additional information on PFMConnect, please visit our website or contact