The head of the International Monetary Fund (IMF) said on Saturday the world’s financial regulators had long been “alarmed” about Panama’s lax approach to taxation and corruption but failed to take action.



In her strongest comments yet addressing the global tax evasion scandal exposed by the Panama Papers, Christine Lagarde said: “In the case of Panama there had been alert and alarm raised, but there had not been the level of implementation that was expected.”

Lagarde said the international community needed to do much more to fight tax evasion and corruption and must take action rather than just issue reports warning about the activities of tax havens like Panama.

Speaking at the IMF’s spring meetings in Washington, she said: “I think all of us, we need to think outside the box and see how the mechanisms and the flow of assessment can flow through with implementation and consequences in case of failure to implement [changes to comply with international tax and transparency standards].

“There has to be follow up because it is too serious to just be left to a report.”

Lagarde said she had “certainly committed” herself to “the fight against corruption”, which she said was now as important to the future of the global economy as climate change and gender and income inequality. Cracking down on international tax evasion was going to be one of the IMF’s “new challenges”, she said.

“I think that international taxation – the implementation of a safe network of taxation systems as well as the economic framework of the fight against corruption – are two new areas where I think we need to go further.”

Earlier this week, Lagarde said the unprecedented leak of 11.5m files from offshore law firm Mossack Fonseca showed that “the [international tax] rules appear to be skewed towards” the global rich.

“Clearly, what has resulted from the review of these Panama Papers indicates that however important [international tax rules to prevent] base erosion and profit shifting … it is unfinished business,” she said in her opening address to the meetings.

Christine Lagarde speaks during a news conference in Washington. Photograph: Joshua Roberts/Reuters

“A lot of things have gone global, but there is one thing that has not gone global, and that is tax. It is still very much a local affair. International cooperation really has to be significantly improved and we are happy to play our part,” she said.

“When we issue a report that is flabbergasting, indicating that work needs to be done by the country, there has to be follow-up.”

Jim Yong Kim, the president of the World Bank, said the revelations contained in the Panama Papers were a “great, great concern” and “very, very damaging” to the bank’s “mission to end extreme poverty”.

“When taxes are evaded, when state assets are taken and put into these havens, all of these things can have a tremendous negative effect on our mission to end poverty and boost prosperity,” he said in his opening address to the meetings.

George Osborne, the UK chancellor, on Friday called for the creation of an international blacklist of tax havens and for the global community to deploy clear sanctions against any country – including British overseas territories and crown dependencies – that continue to facilitate tax evasion.

He asked other world leaders at the International Monetary Fund’s spring meeting in Washington to join Britain in creating a globally recognised list of jurisdictions that are still allowing the rich and powerful to avoid paying their fair share of tax.

Osborne said the creation of the blacklist, which was inspired by the release of the Panama Papers, would be a “clear threat” with “clear sanctions” to countries that continue to fail to comply with international tax rules.