There is a little-noticed but important difference between the World Bank’s original goal for poverty reduction and the first of the subsequent UN Sustainable Development Goals (SDG1). The difference is that the Bank’s goal was to reach a 3 percent poverty rate by 2030, while the SDG1 is to “eradicate” poverty by 2030, where “eradicate” means zero. Yet that 3 percent could well make a big difference
CGD Policy Blogs
When development finance institutions (DFIs) use subsidies to support private firms in developing countries, they fundamentally change the nature of their business. To ensure the maximum development impact of scarce aid resources, subsidies should be competitive wherever possible, capped if not competitive, and transparent in every case.
The Private Sector Window (PSW) takes resources from the World Bank’s soft lending arm, the International Development Association (IDA), and uses it to support private sector investments in poorer developing countries.This is a comparatively straightforward way for the IFC to move money, but it is hard to know if it is a good way, in part because of the Corporation’s opaque lending practices –which need to change.
The IMF estimates that on average, low-income countries (LIC) will need additional resources amounting to 15.4 percent of GDP to finance the Sustainable Development Goals (SDGs) in education, health, roads, electricity, and water by 2030. These resource requirements are even greater in sub-Saharan Africa than in a typical LIC: the median sub-Saharan African country faces additional spending of about 19 percent of GDP. In the average LIC, the IMF estimates that of the required additional financing, 5 percentage points of GDP would have to come from domestic taxes.