Weak Institutions Fuel Illegal Money Flow in Developing Countries

New Delhi, Dec 30 (PTI) Weak institutions are responsible for illegal flow of money in many developing and poor countries, a senior official said on Monday.

Addressing an event here, Secretary in the Ministry of External Affairs Dammu Ravi said there is need to reduce over dependence on hard currencies to reduce illegal financial flows.

"There is a need to address gaps in taxation structure...Weak institutions in many countries are responsible for illegal flow of money," he noted.

Ravi said Global South countries should develop digital public infrastructure to reduce illegal financial flow.

He also noted that the Covid pandemic has contributed to indebtedness of several countries, which makes case of reforms in multilateral development institutions more strong.

Referring to Brazil's proposal of a two per cent wealth tax on dollar billionaires, Ravi said, "All countries will have to come on board on this proposal as you require a collective effort".

Also, speaking at the event, NIPFP (National Institute of Public Finance and Policy) Director R Kavita Rao said just setting up good taxation environment is not enough.

"We need good institutional framework...the fight against illegal flow of money is big and it can not be fought with the help of weak institutions," Rao said.