Tag: Fiscal Policy

Fiscal space for development concept
Building resilience

Are we trading away fiscal space for development?

By Devika Dutt, Lecturer in Development Economics at King’s College, London and Kevin P. Gallagher, Director of the Boston University Global Development Policy Center, and Professor of Global Development Policy at Boston University

Developing nations need to mobilise an additional USD 1 trillion per year to meet their shared 2023 development and climate goals, but the need to invest comes precisely at a time when developing countries lack the fiscal space to do so.

What has been driving debt distress and how can governments and international institutions adapt to help?

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Development Matters
irut, Lebanon - August 2020: Beirut Port destroyed following explosive blasts. Photo: Shutterstock
New social contract

Lebanon’s path back from the brink of collapse

By Dr. Nasser Saidi, Economist and former Minister of Economy and Industry of Lebanon

Since October 2019, Lebanon has been in the throes of a historically unprecedented economic and financial meltdown, simultaneously facing a humanitarian crisis, a debt crisis, a banking crisis, a currency crisis, and a balance of payments crisis. The numbers are staggering. Real GDP has declined for the fourth consecutive year by a cumulative 45% since 2018 making it the second most severe financial crisis in history. The Lira has lost 90% of its value, annual inflation is running at 150% and an 80% de facto haircut has been imposed on deposits.

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Development Matters
Covid-19, Latin America and the Caribbean, New social contract

Fiscal policy in the time of COVID-19: a new social pact for Latin America

By Pablo Ferreri, Public Accountant and former Vice Minister of Economy and Finance of Uruguay

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

We could say that ultimately the role of government remains unchanged overtime: to achieve ever higher levels of development with the understanding that true development means achieving sustained economic growth while generating greater equity and social cohesion. This must be done through more and better exercise of civil rights and in an environmentally sustainable manner. But in achieving this ultimate goal, challenges change according to realities that governments must face.

Challenges that Latin America faced fifteen years ago, when it enjoyed high levels of growth and a commodity boom in an increasingly open world, are quite different to those that have been brought about by economic slowdown, lower international prices and new isolationist tendencies.

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Development Matters
Policy, SDGs

The role of fiscal policies for sustainability

LJD

By Karen B. Brown, Theodore Rinehart Professor of Business Law, George Washington University Law School

This blog is part of a special series exploring subjects at the core of the Human-Centred Business Model (HCBM). The HCMB seeks to develop an innovative – human-centred – business model
based on a common, holistic and integrated set of economic, social, environmental and ethical rights-based principles. Read more about the HCBM here, and check out an event about it here
The HCBM project originated in 2015 within the World Bank’s Global Forum on Law, Justice and Development and is now based at the OECD’s Development Centre.

development-financeSustainable enterprises seek to marry models for good business practices with principles of economic, social and environmental sustainability, many of which are founded on the United Nations Sustainable Development Goals (SDGs). These objectives aim to advance human rights, fair wages, healthier and safer working conditions, gender equality, child welfare, environmental protections, and ethical behavior designed to impede corruption, money laundering and tax evasion. The failure to achieve these objectives imposes considerable costs on governments: diminished productivity and quality of life for their constituents, inefficiency in the operation of markets, and reduced economic growth. An important step towards achieving sustainability goals may come through a government’s use of incentives in the fiscal regime.

Governments traditionally use their tax codes to make “tax expenditures” designed to achieve objectives that advance important policy goals or principles. For example, a government may provide a departure from normal tax rules by reducing the capital gains tax and deferring the time for when gains must be reported if a taxpayer invests in certain qualified opportunity zones that are designated low-income communities. In other words, the government is willing to forego the capital gains tax revenue it would otherwise collect in exchange for investment intended to stimulate economic growth in areas where underserved constituents reside. Other examples abound of using tax expenditures to achieve legitimate governmental ends. Consider the following three ways — substantive tax provisions, tax rate reductions and “bright listing ”– that use incentives to encourage the integration of human-centred goals into business practices: Continue reading “The role of fiscal policies for sustainability”

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New social contract, Policy, SDGs

How can developing countries learn to tax?

By Antonio Savoia, Global Development Institute, University of Manchester; Roberto Ricciuti, University of Verona and CESifo; and Kunal Sen, UNU-WIDER and Global Development Institute, University of Manchester

Development-Finance-shutterstock_524218915The capability to raise revenues from taxes – often called fiscal capacity – is a crucial aspect for the functioning of every state, particularly in developing countries. Two reasons account for this. First, greater fiscal capacity is fundamentally important for state formation, as it is usually associated with the creation of a civilian bureaucracy that can itself provide an enabling environment for the consolidation of statehood. Second, greater fiscal capacity implies greater access to resources needed to provide public goods. Developing countries are only able to raise a small share of taxes over GDP compared to advanced economies. They need higher revenues to invest in a number of economic and social areas that are crucial for their growth, such as healthcare, education and infrastructure. This is also relevant to pursue the Sustainable Development Goals (SDGs) by 2030, an ambitious enterprise requiring far greater resources. Indeed, SDG 17 explicitly refers to the mobilisation of government revenues (Target 17.1).

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Latin America and the Caribbean, Policy, Social Protection

Security, violence and fiscal policies in Latin America

By Eduardo Salido Cornejo, Public Affairs and Policy Manager Latam, Telefonica    

Police-Latin-America-ViolenceViolence is a central theme in Latin American popular music. Films and paintings portray well-known tragedies affecting Latin American societies. Art imitates life according to the 2017 Latinobarómetro since Argentinians, Mexicans and Panamanians declare public safety their number one problem. It is second on the list of citizen concerns in Colombia and Venezuela, just behind supply issues in Venezuela and the peace process in Colombia. Violence, crime and insecurity are the region’s main issues ahead of unemployment, economic problems or inequality.

According to data from the Brazilian think tank Igarapé Institute, 33% of all homicides in the world take place in the region, which is home to just 8% of the world’s population. Of the 20 countries with the highest homicide rates, 17 are in Latin America, where 43 out of the world’s 50 most violent cities are located. For every 100 000 inhabitants in Latin America, 21 are murdered, while the world average is seven. In the last decade, the homicide rate in Latin America increased 3.7%, while the population grew 1.1%.1

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