Financial Transparency Coalition

ISTANBUL, Turkey – A United Nations Development Program (UNDP) commissioned report from Global Financial Integrity (GFI) on illicit financial flows from Least Developed Countries (LDCs) was presented for discussion yesterday at the United Nations IV Conference on Least Developed Countries hosted by the Republic of Turkey.

The global financial and economic crisis has accelerated vast transformations in the current landscape of development finance. While ODA budgets are increasingly under threat, public development finance is increasingly being used to leverage private financial resources. This is taking place at a time when the patterns in private flows are swiftly changing – including through the increasing prominence of capital flows from emerging economies, and the changing landscape in global finance in the wake of the global crisis.

Not my title: one Carlo Cottarelli, Director of the IMF’s Fiscal Affairs Department, used for a blog on the Huffington Post. He was talking about what the IMF is doing to help developing countries on this issue. He lists a strong commitment by many countries  to strengthen their revenue systems, through both administrative reforms and improved tax policies. And he refers to good governance and avoiding exemptions and preferences plus the need for political will to drive through tough policy changes to build and support firm, even-handed enforcement.  These, he says, are the issues of concern for developing countries. But he makes no mention at all of:

• transfer pricing abuse
• tax havens
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The European presidency has just issued a note advocating a push to increase financial transparency in Europe through its Savings Tax Directive. As they say:

"The Presidency attaches crucial importance to gear up bilateral talks in order to reach political agreement upon the adoption of the Savings Tax Directive in the very near future."

Unsurprisingly, there are some rather large flies in this ointment. Austria and Luxembourg have long been holdouts on the European Savings Tax Directive, working hard behind...