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Overview

  • The world has entered a new era of rapid global change driven by major shifts in demographics, wealth, technology, and climate change.

    Today, fewer people live in extreme poverty than ever before. But economic growth has been uneven, especially in the poorest areas. Global challenges—including fiscal strains on governments, slow income growth among the poorest, natural disasters, and record levels of displacement—are threatening recent gains. These challenges are further compounded by intensifying risks and gradually tightening global financial conditions including trade tensions, rising debt levels, and increasing inequality—among and within countries.

    To accelerate economic growth and inclusion in sustainable ways, countries must tackle a variety of related underlying challenges. These include low levels of domestic resource mobilization in developing countries, rising debt levels, an uncertain trade environment, and the rising danger of climate change.

    Last Updated: Mar 18, 2020

  • Economic growth must benefit all. The World Bank Group is working with its clients and partners to develop smart fiscal policies that help address challenges to economic stability and promote economic inclusion. Priority areas include:

    • Trade: Open trade is an engine of growth that creates jobs, reduces poverty, and increases economic opportunity, including for women in developing countries.

    • Debt: Debt is a critical form of financing for the sustainable development goals, but only when borrowing is done at sustainable levels and in a transparent fashion. 

    • Economics of climate change: Climate change is no longer simply an environmental problem. It has become a serious financial and economic problem that, left unmitigated, could push an additional 100 million people into poverty.

    • Domestic resource mobilization: Better tax systems are one of the biggest untapped resources to finance the fight against poverty. 

    Last Updated: Mar 18, 2020

  • Monitoring economic growth

    • World Bank economists create country-specific reports—such as Country Economic Memoranda, Economic Updates, and Growth Reports—to address questions related to economic growth. These reports are critical inputs for the Bank’s dialogue with country authorities and, together with sector-specific reports, frame country strategies. 

    Promoting debt transparency

    • In 2018, the Bank and the IMF announced a new collaborative work program, the Bank-Fund Multipronged Approach for Addressing Emerging Debt Vulnerabilities. This work is taking place in the context of the global development agenda—including the SDGs—and supports better monitoring of debt vulnerabilities, structural reforms to help reduce debt vulnerabilities, greater debt transparency, and scaled-up capacity building on debt management. 

    • Working with the IMF, the Bank implemented the revised Debt Sustainability Framework for low-income countries, which allows creditors to tailor their financing terms in anticipation of future risks and helps countries balance the need for funds with the ability to repay their debts. The framework guides countries in supporting the SDGs when their ability to service debt is limited.

    • The Bank Group’s signature Debt Management Facility provides advisory support, training, analytical tools, and peer-to-peer learning that strengthen countries’ ability to manage debt. Since its inception in 2008, it has supported capacity building and reforms in over 75 countries and implemented more than 290 technical assistance missions. In 2019, the Bank launched the third phase of the facility to scale up support on debt management and transparency.

    Promoting a system of global trade that benefits all

    • The 2020 World Development Report focused on global value chains (GVCs). In the last 30 years, GVCs have helped poor countries grow faster, lifting many out of poverty, and today they account for almost half of global trade. The report calls for greater international cooperation to keep markets open and to address policies that distort trade.

    • The World Bank is supporting the African Union to assist the creation of the African Continental Free Trade Area (AfCFTA) which has the potential to boost intra-regional trade and significantly reduce poverty. We are assessing the effects of tariff reductions on government revenues and quantifying the impact on trade, growth and poverty, including women and youth.  

    • A series of studies on the Belt and Road Initiative shed light on the ambitious effort to improve regional cooperation and connectivity on a trans-continental scale. The studies are designed to help policymakers assess the effects of the BRI and to identify policies that will help maximize the benefits and mitigate the risks. 

    Building effective and accountable institutions that serve all citizens

    • The Tax Administration Modernization Project in Armenia has trained 35,000 tax inspectors, automated 96 percent of tax services and documents, and significantly reduced the time required for making tax payments (by 187 hours, or 37.5  percent). Since 2012, tax collection has improved from 16.3 to 21.0 percent of GDP.

    • In Peru, technical assistance under an international tax project contributed to the collection of more than US$120 million in additional revenue in 2018 due to audits by the tax administration of transfer pricing arrangements of multinational companies.

    • A Bank-financed project in Tajikistan helped double the number of active firms and individual taxpayers filing taxes, increased the average tax revenue collected per tax official by 85 percent, and reduced the number of hours spent on complying with tax-related regulations by 36 percent.

    • The World Bank Group is supporting Sierra Leone’s effort to modernize revenue administration through automation of the Customs and Domestic Taxes Departments. Automated System for Customs Data (ASYCUDA World) was commissioned in January 2019. As a result, revenue collections doubled in the first quarter of 2019 over the same quarter in 2018.  

    • In an effort to tackle international tax planning and evasion, World Bank Group technical assistance has allowed for the strengthening of anti-abuse rules in several countries, including Senegal, Nigeria, Liberia, Cape Verde, Mauritania, and Kenya. Revenue collections from audits have been substantial. In Kenya, for example, tax officials who received training successfully negotiated transfer-pricing audit adjustments that brought in additional tax revenue of $135 million in 2016. 

    • Since 2015, the World Bank Group has provided support to Somalia on tax policy and administration as well as taxpayer education to improve voluntary taxpayer compliance. During this period, revenue collection more than doubled, from $76 million in 2013 to $183 million in 2018, exceeding the target under the IMF Staff Monitored Program.

    Last Updated: Mar 18, 2020

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In Depth

Debt & Fiscal Risks Toolkit

The World Bank Group helps countries manage debt and fiscal risks effectively. We offer a specific set of tools and reports to help countries balance the need for financing development while minimizing costs and risk.

Global Economic Prospects

The semi-annual Global Economic Prospects (GEP) report assesses the global outlook for growth and stability in emerging and developing countries.

Commodity Markets Outlook

Published twice a year, the Commodity Markets Outlook (CMO) report assesses global trends in commodity market developments.

Additional Resources

Contacts

Washington
Joe Rebello
jrebello@worldbankgroup.org
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