Fiscal Capacity Development Can Boost Inclusive Growth

Demand for capacity on taxation and spending on the rise

Efficient public spending promotes inclusive growth

International engagement and partnerships key to boosting capacity

Panelists at the IMF-World Bank Spring Meetings seminar “Collect More and Spend Better: The Role of Capacity Development” called for heightened partnerships among all stakeholders to respond to the growing demand for capacity development among many developing countries that seek to improve fiscal policy.

In opening remarks, IMF Managing Director Christine Lagarde highlighted the importance of building institutional capacity for stronger economic policies, inclusive growth, and rising living standards as the global community pursues the post-2015 development agenda.

“Last July at the Addis Ababa Summit, participants rallied behind the concept that domestic revenue mobilization was one of the most powerful ways to improve collections, improve sovereignty, and make sure that revenues were there to face the needs of public spending,” she said.

Cooperation, coordination, and partnership

All panelists recognized that the most effective response to the growing demand for capacity development was what IMF Deputy Managing Director Carla Grasso termed “cooperation, coordination, and partnership” across all stakeholders, including implementing countries, strategic development partners, and thought leaders.

Panelist Eric G. Postel of the United States Agency for International Development (USAID) considered capacity development an “underinvested” area, given the high demand for technical assistance and training by developing countries.

“We have to do more and you can see the benefits of doing more,” he said.

Klaus Rudischhauser, Acting Director General of the European Commission’s Directorate General for International Cooperation and Development (DG DEVCO) highlighted the importance of the European Commission’s “Collect More—Spend Better” Agenda in supporting developing countries in strengthening their public finances and achieving progress toward the Sustainable Development Goals (SDGs). On the revenue side, he pointed to the need for stepping up support on fighting tax evasion, tax avoidance, and illicit financial flows. On the expenditure side, he outlined the work that needs to be done in strengthening aggregate fiscal discipline, as well as capacities for strategic resources allocation and the efficient and effective use of resources. In this context, he also pointed to...