{
  "title": "Roads to Stronger Growth in Low-Income Countries",
  "publication": "IMF Blog, January 12, 2017",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2017/01/12/roads-to-stronger-growth-in-low-income-countries",
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  "summary": "Authors: Tao Zhang, Vladimir Klyuev",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Authors: Tao Zhang, Vladimir Klyuev\n- Date: January 12, 2017\n- Core message: Low-income countries should build more infrastructure—roads, electricity, sanitation, telecommunications, and water delivery—to strengthen growth and meet the 2030 Agenda for Sustainable Development. A chapter in a recent IMF report examines obstacles and policy options."
    },
    {
      "heading": "Challenges to scaling up infrastructure",
      "content": "- Public debt and external financing\n  - In many low-income countries, public debt levels have risen and external financing conditions have tightened, making loans for infrastructure more difficult and risky.\n  - During 2015 alone, the ratio of public debt to GDP rose from 34 to 42 percent.\n- Capacity and resource constraints\n  - A survey identifies availability of external financing and administrative capacity constraints as key obstacles in the most vulnerable countries.\n  - For low-income countries better connected to global capital markets, the sufficiency of domestic financial resources is the most important concern."
    },
    {
      "heading": "Improving public investment efficiency and domestic resource mobilization",
      "content": "- Public investment efficiency\n  - Value for money in public investment varies considerably among low-income countries and is generally lower than in other states.\n  - Broad principles (e.g., directing capital expenditure to the most productive projects) are understood but institutional mechanisms—effective cost-benefit analysis and transparent procurement—are often lacking.\n- Domestic revenue measures\n  - More domestic resources from taxes can create space for priority spending on infrastructure.\n  - Persisting issues: tax revenues remain lower in poorer countries partly due to lower collection efficiency.\n  - Policy actions to expand fiscal space: improving tax administration; broadening the tax base; closing unjustified loopholes; streamlining expenditures; and, in some cases, raising tax rates.\n- Concessional finance and multilateral banks\n  - Concessional financing will need to continue playing an important role.\n  - Increasing the capital of multilateral development banks and adjusting how they deploy capital could generate more resources for the poorest countries.\n  - The rise of new bilateral donors (particularly China) and new institutions (such as the Asian Infrastructure Investment Bank) has brought additional funds for development.\n  - Many potential donor countries face their own fiscal challenges, limiting prospects for a large increase in multilateral and bilateral donor financing.\n  - Even scaled up official development assistance is considered insufficient to meet the investment requirements of the Sustainable Development Goals by 2030."
    },
    {
      "heading": "Mobilizing private finance and public-private partnerships",
      "content": "- Evidence and potential\n  - There is little purely private infrastructure in low-income countries outside mobile telecommunications; the mobile sector demonstrates viability of private models.\n  - Small-scale applications (e.g., solar micro-grids) provide additional examples.\n- Public-private partnerships (PPPs)\n  - PPPs are relatively frequent in electricity generation.\n  - Critical requirements: strong institutional framework and sound PPP management to avoid undue fiscal risks.\n- Barriers to private investment\n  - A favorable business environment—stable macroeconomic conditions and predictable policies—is necessary but may not be sufficient.\n  - Numerous obstacles prevent private investors from connecting to viable projects; low-income countries often lack expertise in structuring projects to deliver acceptable risk-return profiles.\n  - Large institutional pools of capital (close to $100 trillion in advanced economies) are seeking decent returns but face bottlenecks in accessing viable projects in low-income countries.\n- Role of multilateral development banks and project preparation\n  - Multilateral development banks help structure projects and provide risk mitigation: political risk insurance, credit guarantees, subordinated debt, and other instruments.\n  - Numerous project preparation facilities assist in structuring viable projects; example cited: the recently established Global Infrastructure Facility with an initial capitalization of $100 million.\n  - This catalytic approach is promising, although progress has been limited so far."
    },
    {
      "heading": "IMF support and tools",
      "content": "- IMF instruments\n  - The IMF’s Infrastructure Policy Support Initiative helps countries evaluate macroeconomic and financial implications of alternative investment programs and financing strategies and bolster institutional capacity in managing public investment.\n  - These tools have been applied in countries including Cambodia, Honduras, the Kyrgyz Republic, and Togo.\n  - The IMF allocates one-fifth of its support for national capacity building to assistance in the areas of tax policy and administration, which are key to domestic revenue mobilization."
    },
    {
      "heading": "Key statistics and figures",
      "content": "- 2030 (Agenda for Sustainable Development target year)\n- During 2015: public debt to GDP rose from 34 to 42 percent\n- Close to $100 trillion (large institutional pools of capital in advanced economies)\n- Global Infrastructure Facility initial capitalization: $100 million\n- IMF national capacity building allocation to tax policy and administration: one-fifth\n\nSource: Roads to Stronger Growth in Low-Income Countries, Tao Zhang, Vladimir Klyuev, January 12, 2017.\n\n---\n\n Content in this bundle\n\n- World Bank Document\n  - World Bank Document (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - World Bank Document (PDF){rel=\"external\" type=\"application/pdf;charset=utf-8\"}\n- 低收入国家实现更强劲增长之路; IMF博客; 2017年1月12日\n  - 低收入国家实现更强劲增长之路; IMF博客; 2017年1月12日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 低收入国家实现更强劲增长之路; IMF博客; 2017年1月12日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Making Public Investment More Efficient; IMF Policy Paper, June 11, 2015\n  - Making Public Investment More Efficient; IMF Policy Paper, June 11, 2015 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Making Public Investment More Efficient; IMF Policy Paper, June 11, 2015 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- عربي\n- https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart1.jpg\n- recent report\n- https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart2.jpg\n- https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart3.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2017/01/12/roads-to-stronger-growth-in-low-income-countries"
    }
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    "Authors: Tao Zhang, Vladimir Klyuev",
    "Published: January 12, 2017",
    "Authors: Tao Zhang, Vladimir Klyuev",
    "Date: January 12, 2017",
    "Core message: Low-income countries should build more infrastructure—roads, electricity, sanitation, telecommunications, and water delivery—to strengthen growth and meet the 2030 Agenda for Sustainable Development. A chapter in a recent IMF report examines obstacles and policy options.",
    "Public debt and external financing",
    "Capacity and resource constraints",
    "Public investment efficiency",
    "Domestic revenue measures",
    "Concessional finance and multilateral banks",
    "Evidence and potential",
    "Public-private partnerships (PPPs)",
    "Barriers to private investment",
    "Role of multilateral development banks and project preparation",
    "IMF instruments",
    "2030 (Agenda for Sustainable Development target year)",
    "During 2015: public debt to GDP rose from 34 to 42 percent",
    "Close to $100 trillion (large institutional pools of capital in advanced economies)",
    "Global Infrastructure Facility initial capitalization: $100 million",
    "IMF national capacity building allocation to tax policy and administration: one-fifth",
    "**World Bank Document**",
    "**低收入国家实现更强劲增长之路; IMF博客; 2017年1月12日**",
    "**Making Public Investment More Efficient; IMF Policy Paper, June 11, 2015**",
    "[عربي](http://blog-montada.imf.org/?p=4662)",
    "[https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart1.jpg](https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart1.jpg)",
    "[recent report](http://www.imf.org/external/pp/longres.aspx?id=5086)",
    "[https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart2.jpg](https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart2.jpg)",
    "[https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart3.jpg](https://www.imf.org/wp-content/uploads/2017/01/lidcs-infrastructure-chart3.jpg)"
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