Sustainable Development Lessons from IMF/WB Spring Meetings class=

Sustainable Development Lessons from IMF/WB Spring Meetings

Posted on in National Happiness

Sustainable development drives political and economic discussion these days. As it should. As it did at the annual International Monetary Fund and World Bank Spring Meetings last week in Washington. I was fortunate to attend numerous sessions, augmented by watching webcast replays.
My takeaways on sustainable development, good governance, and government digital transformation have been collected in 3 blog entries. This includes summary takeaways followed by takeaways from each session. Webcast replays are embedded.

Context

  • No country is expected to achieve the 17 Sustainable Development Goals (SDGs) by 2030
  • Impediments to achieving SDGs are increasing thanks to food insecurity, trade tensions, migration, and climate change denial
  • Rethinking traditional development approaches is critical to meet SDG aspirations

Top 10 Sustainable Development Takeaways

Sessions at the Spring Meetings explored more about problems than solutions. That’s probably a good thing because innovation comes only through analyzing the problem space. Unfortunately, the solution space exploration focused primarily on improving governance, and trying to attract private financing. Good government  governance results in improved revenue collection, better spending effectiveness, and increased trust. Trust helps to increase private financing. The question is really how to create the will to improve governance, considering the range of incentives to not do so. How can the SDGs motivate governance improvements when the financial crisis, Arab spring, and Millennium Development Goals only had incremental effects?
Numerous observers claimed that “one size doesn’t fit all”. You’d think that the narrative could have advanced beyond articulating the obvious.
It seemed to me that experts understand what necessary ingredients to meet SDGs. They don’t understand the recipe sequence of mixing ingredients, minimum and maximum amounts of ingredients, nor how to adjust the recipe to the country context.

  1. Governance is not a zero-sum game: sustainability problems do not respect boarders – good governance makes countries, regions, and the world more stable – it enables countries to focus on sustainability solutions many of which require regional and international cooperation
  2. No magic bullets: every financing instrument has risks, every governance practice improvement has monitoring and evaluation costs, and every sustainability intervention has uncertainty, so a risk-based approach to sustainability interventions is needed
  3. State credibility required: trust, transparency, accountability, anticorruption and good citizen services are preconditions for sustainable development to – however, this seems to be the answer to almost any development solution, so more holistic approaches are needed
  4. Digital can help:  digital technologies for education, health, agriculture, transportation, and smart cities are part of the solution but experts lack analytical frameworks for government digital transformation because every digital solution has cyber-threats and negative externalities, so a risk-based approach to digital interventions is needed
  5. Persistence required: results from policy and practice changes take time , so medium-term approaches to planning, budgeting, revenue, and public investments are needed as are methods to measure and track performance in the complex public space
  6. Governance gaps impediments: recognition of financing and infrastructure gaps are insufficient to understand the inability to achieve SDGs, there is a need to understand the full scope of governance gaps to develop intervention roadmaps
  7. People-centred: SDGs are fundamentally about people where wellbeing should drive and simplify government priorities, where equity is a linchpin, resulting in improved trust in government and social cohesion creating an engagement environment of working with citizens to achieve national goals
  8. Follow the money: integration of SDGs from planning through spending to results can be achieved in core government financial management systems by integrating national objectives within the Chart of Accounts and using program budgeting across government silos
  9. Investment as portfolio: hard public investments like infrastructure, soft social public investments, and infrastructure maintenance operational budgets need to be integrated for an effective view for decision-makers, but should be seen as a portfolio when it comes to financing methods
  10. Public financial management helps: effective PFM systems supported by Government Resource Planning software provides cross-silo visibility across the budget cycle for policies, plans, scenarios, budgets, revenue, expenditures, and results

Public Financial Management Reforms as a Driver for Inequality

This session focused on tax equality in Uganda, although much of the discussion was around spending equality. Some takeaways:

  • Need to align equitable tax collection with equitable spending & an eye on debt to sustain policies
  • The medium term spending perspective, such as Medium Term Expenditure Frameworks, need to be extended to Medium Term Revenue Strategies
  • Tax avoidance represents a key impediment to achieving equality in social public investments
  • Tax policy showing the linkage between collected and program spending can improve the willingness to pay taxes, but earmarked spending based on revenue source may not be effective in the long run

Sustainable Infrastructure: Aligning with Rights and SDGs

The financing gap was the major theme of this session. The IMF found that there is a financing gap of 0.3% of GDP in low-income countries to meet the Sustainable Development Goals (SDGs) by 2030. Meanwhile, McKinsey  has identified an annual $3.3T infrastructure gap to meet current growth rates to 2030.
International Monetary Fund: Financing Gap
Some takeaways:

  • There’s a lot of confusion about where to start to overcome the financing and infrastructure gaps, although some of the governance gaps were mentioned like government performance, transparency and trust
  • There are no magic bullets for financing, with many examples of failed Public Private Partnerships
  • The notions of sustainable and quality infrastructure investments were discussed, but without any shared understanding of the concepts
  • The need to integrate government objectives, such as national development plans, with infrastructure project value-for-money design ..

Governance Gaps

The Economic and Social Case for Human Capital Investments

Big infrastructure projects are dramatic. Yet, it’s social public investments that have the most dramatic long-term impact. Some takeaways:

  • The Human Capital Project found that 2/3 of global capital is human capital demonstrating the importance of thinking differently about social investments
  • Equality is a key component to building human capital for sustainable growth, the world is estimated to be $164T poorer because of gender inequality
  • Wellbeing makes policy people-centric, enabling governments to focus on evidence for spending decisions (as we learned earlier this year at the H-20)
  • Developed countries like New Zealand have created wellbeing budgets to address inequities
  • Wellbeing and human capital success can only be achieved through government-wide approaches tied to national goals – silos will not work
  • Human capital development is like an annuity that builds value over time, so a long-term horizon is needed that can be impeded by short-term political pressures
  • Wellbeing requires measuring outcomes rather than budget inputs making the performance structure more complex but more rewarding

Building Human Capital in Africa: The Future of a Generation

Driving Private Investment to Fragile Settings

Private sector investment is seen as a solution to the financing gap. Some takeaways:

  • Private investment needs “de-risking” through financing insurance from development partners, improved governance to increase trust, and improved regulatory environment for doing business
  • There doesn’t appear to be a significant uptake of the approach of combining private and public funding
  • The impact of large cities investment in sustainability is significant, but was not discussed – that’s surprising given that the majority of people live in urban centres and cities are leading much of the narrative

SDGs in Action: Integrating the SDGs in National Budgets


This discussion seemed to lack a nexus or central concept. It was somewhat unclear how the participants expected SDGs integration throughout the entire government budget cycle. Some takeaways:

  • Lack of information for decision-makers on how much governments are spending on SDGs, and there is a risk that traditional spending will be counted as part of the SDGs commitment
  • There will be no significant increase in private investment in SDGs without trust, there is a good governance dividend
  • Improvements come from measuring, so SDGs should be embedded in government Charts of Accounts tracking budget plans, actual revenue and spending, and comparing outcomes with plans

State of the Africa Region: The Role of Regional Cooperation in Tackling

State fragility and reducing growth in Africa were the main concerns for this session. Takeaways:

  • Governance isn’t a zero-sum game because fragility and the causes of fragility cross borders
  • State credibility is the primary factor to overcome state fragility because the State is often not present or capable of citizen services
  • Gender equity and opportunities for critical for economic growth yet run up against cultural norms
  • Digital can help growth by improving access to needed information and education

Chief Economists Roundtable: Income Inequality Matters: How to Ensure Economic Growth Benefits the Many and Not the Few

The Chief Economists presented some interesting observation about strengthening institutions, equity and trust for economic growth:

Boosting Investment in People and Infrastructure

Primary focus of this session were the financing and infrastructure gaps. Takeaways included:

  • Improved revenue mobilization can be achieved through transparency and anti-corruption, aided by digital technologies although it’s unclear how long it takes to achieve material results
  • The lack of infrastructure isn’t limited to developing countries, infrastructure spending in advanced economies has dropped, and much of the existing infrastructure is crumbling
  • The Public Investment Management Assessment (PIMA) tool has been used effectively in advanced and emerging economies
  • Planning and execution performance is mixed with many governments witnesses significant delays and cost overruns for infrastructure
  • Capacity building is needed in many countries, particularly at the sub-national level

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