Ideas to Action:
Independent research for global prosperity
Last week, CGD co-hosted an event with the International Rescue Committee (IRC) with a simple premise that contradicts much conventional wisdom: refugees are not a burden, but a development asset. That premise compels the question: what policies, financing, and partnerships are needed to realize the promise of mutual benefit?
A large proportion of revenue gains over the last two decades has come from countries’ efforts to improve the design and compliance of consumption and other indirect taxes, particularly the VAT (value-added tax); in doing so, the objective has been to minimize VAT’s regressive effects by exempting sales of small businesses below a threshold (where the poor typically tend to buy) as well as imposing zero tax on certain food and other products which take up a large proportion of consumption of poor households. Less attention has gone to expanding the coverage of potentially more progressive taxes, such as personal income and property taxes.
When the world’s finance ministers and central bank governors assemble in Washington later this month. they would do well to focus on another looming debt crisis that could hit some of the poorest countries in the world, many of whom are also struggling with problems of conflict and fragility and none of which has the institutional capacity to cope with a major debt crisis without lasting damage to their already-challenged development prospects.
There is an urgent need to change PSW business models to maintain their financial sustainability while doing much better on mobilization and development impact. Two factors are critical for meeting this challenge: enhanced risk management capability and greater flexibility regarding risk-adjusted returns.
The Eminent Persons Group (EPG), tasked with making the system of international financial institutions fit for purpose in the 21st century, recently gave the G20 Finance Ministers a preliminary report on its work.The report is a bit long on generalities and short on specifics and, as my colleague Nancy Birdsall blogs, it mostly shies away from suggesting concrete adjustments in the way the multilateral development bank (MDB) system works now. Here are eight ideas that the EPG could propose that can be implemented in the next two years.
I’m disappointed by the update. But I’m also hopeful. Here are three concrete issues that the group could raise regarding the MDBs.
Earlier this year, The Centre for Research on Multinational Corporations (“SOMO”; a Dutch NGO) issued a report about an international mining company they said had avoided paying $232 million USD in taxes in Mongolia. The Oyu Tolgoi mine is considered a big deal in Mongolia and has been subject to lengthy negotiations on how to split the risks, costs, and profits of the project between the company and the government. While this question is of primary interest to the people of Mongolia, I think that delving into the detail of individual cases like this is also important for clarifying the broader debates and understanding of tax issues.
I spoke at the 30th Regional Seminar on Fiscal Policy, hosted by the Economic Commission for Latin America and the Caribbean (ECLAC). This year’s seminar focused on the role of fiscal policy in achieving more inclusive and equitable economic growth to meet the 2030 agenda of the SDGs.
Last year the World Bank adopted a new “cascade” approach that intended to maximise finance for development by prioritising private solutions wherever possible. In what world would this “cascade” algorithm make sense? Without a good answer to that question, the cascade risks looking like ideology rather than sound development finance advice.
Perhaps the least noticed, but most impactful, addition to the US foreign assistance toolkit in recent years has been the US sovereign bond guarantee (SBG). However, the Trump administration’s proposed FY 2019 budget leaves out any request for authorization of new SBGs—and it isn’t entirely clear why. As Congress begins to consider the FY19 budget request, I offer three recommendations on the SBG program so that its role in US foreign assistance going forward can be carefully considered.
Commentary Menu