{
  "title": "Development and Debt: Finding the Right Balance",
  "publication": "IMF News, December 2, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/12/01/sp12022019-development-and-debt-finding-the-right-balance",
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  "summary": "Over the past two decades:",
  "authors": [
    "Kristalina Georgieva"
  ],
  "publishDate": "2019-12-02",
  "sections": [
    {
      "heading": "Economic scoreboard: where are we now?",
      "content": "- Over the past two decades:\n  - extreme poverty levels have declined by one third;\n  - life expectancy has increased by a fifth;\n  - real per capita income has grown by about 50 percent on average.\n- Estimated additional annual spending required in key areas (health, education, priority infrastructure) for the region: reaching about 20 percent of their combined GDP in 2030.\n- Current progress toward the SDGs in sub-Saharan Africa: only half-way.\n- Public debt dynamics:\n  - public debt levels increased rapidly between 2011 and 2016 and have since stabilized at around 55 percent of GDP on average;\n  - commercial borrowing—both domestic and foreign—currently makes up two-thirds of the region’s public debt stock.\n- Implication: greater reliance on non-concessional financing implies more spending on debt service and less on social public investment; countries will not be able to “borrow their way” to the SDGs."
    },
    {
      "heading": "Finding the right balance of policies",
      "content": "- Core framing: achieve development goals by balancing policies—financing development while safeguarding debt sustainability; investing in people and infrastructure; aligning long-term objectives with immediate needs.\n- Three powerful tactics countries can pursue:\n  - Generate higher public revenue:\n    - IMF estimate: revenue collection is 3-5 percentage points of GDP below revenue potential.\n    - Example: Uganda—IMF-supported reforms raised the revenue-to-GDP ratio from 11 percent in 2012 to almost 15 percent last year.\n    - Complementary measures: capture returns on public investment via fair user-fees; step up reform of international corporate taxation to close tax loopholes.\n  - Make investment spending more efficient:\n    - Only about 60 percent of the region’s infrastructure spending translates into public capital stock.\n    - Priority: build capacity to assess, select, and implement projects; IMF provides diagnostic tools and technical assistance (examples: Mali, Niger, Burkina Faso).\n  - Strengthen public debt management:\n    - Boost debt transparency by providing accurate, comprehensive, and timely data to build trust with investors, support domestic capital markets, and reduce debt service costs.\n    - Rationale: increased complexity of debt profiles, more complicated debt instruments, and a more prominent role for non-traditional lenders require stronger institutions that record, monitor, and report debt.\n    - IMF and World Bank collaboration: support to strengthen debt recording/monitoring/reporting institutions and free online courses for officials (including debt sustainability analysis).\n- Limits of domestic efforts:\n  - Even strong domestic resource mobilization is likely to cover just a quarter of the estimated SDG needs.\n- A more balanced global team:\n  - Advanced economies can do more on aid: goal to raise official development assistance to 0.7 percent of donors’ national income.\n  - Donors should focus more on infrastructure via grants and concessional financing for projects with credibly high rates of return.\n  - Support for joint platforms where development partners collaborate on international taxation and infrastructure investment.\n  - Greater sharing of knowledge (cost-benefit analysis, cross-country databases on pricing, e.g., road construction cost per kilometer).\n  - Mobilize more private-sector involvement and foreign direct investment by strengthening macroeconomic management and improving the business environment (modernize legal frameworks, reduce red tape, fight corruption).\n  - Promote “blended finance” to combine grants, concessional financing, and commercial funding—encouraging risk-sharing to scale up development finance.\n  - Address security challenges in some cases to unlock investment; mobilize private investment in energy infrastructure to expand reliable electricity and enable digital economies.\n- IMF support modalities highlighted:\n  - capacity development (diagnostic tools, online courses),\n  - policy advice,\n  - financial support to countries, including at zero interest,\n  - technical assistance for public investment management and expenditure assessment."
    },
    {
      "heading": "Conclusion",
      "content": "- Central message: countries must find the right balance between development and debt, between the wellbeing of this generation and the prospects of future generations.\n- Call to action: strengthen collective effort—public sector, donors, and private sector—to scale up efficient investment, improve revenue mobilization, and enhance debt transparency and management.\n- Closing proverb and spirit: “Whatever one person can do, two people can do it even better.” — spirit of Teranga and the Lions of Teranga.\n- Closing rally: A notre tour de jouer!\n\nSpeech by Kristalina Georgieva, IMF Managing Director — High-level Conference, Dakar, December 2, 2019 (As Prepared for Delivery).\n\n---\n\n Content in this bundle\n\n- 061115 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva\n- Senegal and the IMF\n- Speeches\n- PRESS CENTER\n- Fiscal Policy and Development: Human, Social, and Physical Investment for the SDGs\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/12/01/sp12022019-development-and-debt-finding-the-right-balance"
    }
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    "Authors: Kristalina Georgieva",
    "Published: December 2, 2019",
    "Over the past two decades:",
    "Estimated additional annual spending required in key areas (health, education, priority infrastructure) for the region: reaching about 20 percent of their combined GDP in 2030.",
    "Current progress toward the SDGs in sub-Saharan Africa: only half-way.",
    "Public debt dynamics:",
    "Implication: greater reliance on non-concessional financing implies more spending on debt service and less on social public investment; countries will not be able to “borrow their way” to the SDGs.",
    "Core framing: achieve development goals by balancing policies—financing development while safeguarding debt sustainability; investing in people and infrastructure; aligning long-term objectives with immediate needs.",
    "Three powerful tactics countries can pursue:",
    "Limits of domestic efforts:",
    "A more balanced global team:",
    "IMF support modalities highlighted:",
    "Central message: countries must find the right balance between development and debt, between the wellbeing of this generation and the prospects of future generations.",
    "Call to action: strengthen collective effort—public sector, donors, and private sector—to scale up efficient investment, improve revenue mobilization, and enhance debt transparency and management.",
    "Closing proverb and spirit: “Whatever one person can do, two people can do it even better.” — spirit of Teranga and the Lions of Teranga.",
    "Closing rally: A notre tour de jouer!",
    "[061115 (PDF)](/external/np/pp/eng/2015/061115.pdf){rel=\"external\" type=\"application/pdf\"}",
    "[https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)",
    "[Senegal and the IMF](http://www.imf.org/external/country/SEN/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Fiscal Policy and Development: Human, Social, and Physical Investment for the SDGs](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2019/01/18/Fiscal-Policy-and-Development-Human-Social-and-Physical-Investments-for-the-SDGs-46444)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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