IMF First Deputy Managing Director Gita Gopinath warns that high debts, high interest rates, and weak economic growth are hindering countries from meeting their spending needs.
At a seminar on Boosting Growth with Domestic Resources, Gopinath predicted that by 2030, emerging markets and developing economies will require approximately $3 trillion in additional spending, equivalent to 5.5% of GDP, to finance their development goals and climate transition.
“Prioritizing spending so it goes to areas that raise productivity is critical,” she said.
Canada’s Deputy Prime Minister, Chrystia Freeland, highlighted the country’s significant investment in early learning and childcare.
According to her, the policy supporting young families has led to the highest women’s labour force participation rate in the country’s history, with nearly 86% of women employed.
Germany’s Finance Minister, Christian Lindner, stated that the government of Olaf Scholz is implementing reforms in the labour and energy markets.
He added that some developing economies can increase their tax burden by 8-9 percent of GDP while maintaining efficiency, unlike many advanced economies with high tax rates.
“In the case of Germany…we have no problem with tax revenues. We have a problem with prioritizing,” Lindner said.
The challenges faced by Egypt are different. The majority of the population, 60%, is under 30, yet a third lives in poverty.
The importance of addressing informality, enhancing tax efficiency through digitalization, and ensuring tax compliance is paramount.
Egyptian Finance Minister Mohamed Maait emphasized that traditional solutions may not always be effective or politically feasible. “Any solution would impact people’s pockets,” he said.