Achieving the SDGs in a post-pandemic world does not require the same set of strategies adopted in the same scope, form or speed as in a pre-pandemic era. As such, staff at the IMF, in a discussion note have proposed a new long-term macroeconomic framework to achieve the SDGs.
The framework centres on the relationship between investment and growth. And thus, follows the Debt, Investment and Growth (DIG) model with an extension including human capital.
The framework allows policy makers to assess policy packages and actions that when adopted will suffice to reach the SDGs by 2030. Where policy actions do not suffice, the framework shows by how many years the SDGs will be delayed.
Specifically, the framework focuses on recurrent and investment spending in five sectors of the 17 SDGs. These five priority sectors include education, health, roads, electricity and sanitation. Although, it does not capture all 17 SDGs, these five sectors are essential for development and represent a huge chunk of government outlays, the authors say.
“Investment in education, health, roads, water, and power translates into better-educated and healthier populations and better and more infrastructure—all boosting economic growth.
“The framework focuses on the real economy and the fiscal sector, is fully dynamic, and has a long time horizon. In addition to helping build coherent development strategies, the framework makes it possible to assess truly long-term effects.”
To illustrate, the framework can indicate prolonged scarring of the pandemic through the impact on human capital. As reflected in longer unemployment and lower educational attainment due to school closures. However, it also illustrates the benefits of sustained reform.
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While the framework is a step in the right direction, increased commitments must however come from governments across the world. The authors suggest that government policies including structural reforms are important to boost growth and generate more resources.
As a result, the public sector should enable and catalyse private investment by strengthening institutions and improving the business climate. Also, governments must ensure good governance and spend scarce resources prudently.
Governments must scale efforts to improve tax revenues. The authors suggest that this is achievable as countries increase their tax capacity. Also, governments must increase their tax-to-GDP ratio by about 3 to 7 percentage points over the medium term. They asserted that this should be done through comprehensive policy and administration reform.
Apart from raising revenue via taxes, the authors indicate that governments can also increase revenues from other sources by stronger management of government assets. That notwithstanding, governments must also increase efficiency in public spending to meet the SDGs.
Also, actions must not solely centre on government. The private sector must be encouraged to contribute their quota to the growth and development of economies.
After making great strides in accelerating efforts to meet the SDGs, the COVID-19 pandemic has regressed the gains chalked in the last decade. Thus, to be able to still meet the 2030 deadline, extraordinary efforts in terms of funding- public and private and alternatively, donor contributions must be utilized to be within the development path.
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