## Striking the Right Balance Between Sustainable Development and Sustainable Debt _IMF Blog, December 19, 2019_ ## Source details **Canonical URL:** [Striking the Right Balance Between Sustainable Development and Sustainable Debt](https://www.imf.org/en/blogs/articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt) ## Other formats - [Markdown version](/en/blogs/articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt/index.md) - [Structured JSON version](/en/blogs/articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt/index.json) - [Bundle manifest](/en/blogs/articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt/bundle-manifest.json) ## Bibliographic details - Authors: Kristalina Georgieva - Published: December 19, 2019 --- ### Overview - Author: Kristalina Georgieva - Date: December 19, 2019 - Main message: Sub-Saharan Africa has made considerable progress but remains only half-way to meeting the Sustainable Development Goals (SDGs). A balanced approach is required between financing development and safeguarding debt sustainability. ### Context and key trends - Progress over two decades: - Extreme poverty levels have declined by one third. - Life expectancy has increased by a fifth. - Real per capita income has grown by about 50 percent on average. - Remaining challenge: sub-Saharan Africa is still only half-way to meeting the SDGs. - Public debt and financing mix: - Public debt levels increased rapidly between 2011 and 2016; they have since stabilized at around 55 percent of GDP on average. - Commercial borrowing on domestic and international financial markets accounted for more than 70 percent of the increase in debt stock this decade. - Shift to non-concessional financing implies more spending on debt service and less on social and infrastructure investment. - Efficiency and capacity gaps: - Revenue collection estimated to be 3–5 percentage points of GDP below revenue potential. - Only about 60 percent of the region’s infrastructure spending translates into public capital stock (i.e., for every dollar spent, about 60 cents of assets are obtained). - Even strong domestic efforts are likely to cover just a quarter of the estimated SDG needs. ### Five tactics to balance development and debt - Tactics directed at sub-Saharan policymakers: 1. Generate higher public revenue - Close the revenue gap of 3–5 percentage points of GDP. - Example: Uganda, with IMF technical support, raised the revenue-to-GDP ratio from 11 percent in 2012 to almost 15 percent last year. 2. Make investment spending more efficient - Improve the conversion rate of infrastructure spending into public capital stock (current estimate: about 60 percent). 3. Strengthen public debt management - Boost debt transparency by providing accurate, comprehensive, and timely data to build investor trust, support domestic capital markets, and reduce debt service costs. - Tactics directed at the international community and private sector: 4. Advanced economies to increase official development assistance - Goal: raise official development assistance to 0.7 percent of donors’ national income. - Donors could focus more on infrastructure by providing grants and concessional financing for projects with credibly high rates of return. 5. Mobilize more private-sector participation - Bring in more private-sector players, including foreign direct investment. - Use blended finance that combines grants, concessional financing, and commercial funding to share risk and scale up development finance. ### Implementation notes and illustrative examples - Conference convening: IMF together with the Government of Senegal on December 2, in partnership with the United Nations and the Cercle des économistes; held in Dakar. - Analogy: The balanced play of Senegal’s national soccer team, the Lions of Teranga, illustrates the need for balance between competing priorities (attack vs. defense; individual vs. team). - Emphasis on joint action: Public sector responsibility must be matched by international donors and private capital to ensure broadly shared benefits. ### Key statistics and figures (verbatim) - "one third" — decline in extreme poverty levels. - "a fifth" — increase in life expectancy. - "about 50 percent" — growth in real per capita income on average. - "half-way" — progress toward the SDGs. - "between 2011 and 2016" — period of rapid public debt increases. - "around 55 percent of GDP on average" — stabilized public debt level. - "more than 70 percent" — share of the increase in debt stock accounted for by commercial borrowing this decade. - "3–5 percentage points of GDP below revenue potential" — estimated revenue shortfall. - "11 percent in 2012 to almost 15 percent last year" — Uganda revenue-to-GDP ratio improvement. - "only about 60 percent" — share of infrastructure spending that translates into public capital stock. - "about 60 cents" — asset value per dollar spent on infrastructure. - "just a quarter" — share of estimated SDG needs that strong domestic efforts are likely to cover. - "0.7 percent of donors’ national income" — target for official development assistance. *Source: Striking the Right Balance Between Sustainable Development and Sustainable Debt — Kristalina Georgieva, December 19, 2019.* --- ## References - [عربي](https://www.imf.org/ar/News/Articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt) - [日本語](http://www.imf.org/ja/News/Articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt) - [Português](https://www.imf.org/pt/News/Articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt?sc_mode=1) - [conference](https://www.imf.org/en/News/Seminars/Conferences/2019/12/02/sustainable-development-and-debt) _Source: https://www.imf.org/en/blogs/articles/2019/12/19/blog-striking-the-right-balance-between-sustainable-development-and-sustainable-debt_