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Der Jahresbericht 2021/22 bietet ausgewählte Einblicke in Forschung, Politikberatung und Ausbildung des Instituts. Dabei reflektieren Expert*innen des IDOS die Vernetzung der Themenfelder „Nachhaltigkeit“ und „Entwicklung“, die sich seit der Umbenennung des Instituts im neuen Namen German Institute of Development and Sustainability wiederfinden und die stärkere Ausrichtung des Instituts auf nachhaltige Entwicklungsprozesse zum Ausdruck bringen. Die thematischen Kapitel befassen sich vor dem Hintergrund der „Zeitenwende“ mit Fragen zu Autokratisierung, Multilateralismus, Welternährung, Loss and Damage, Wissenskooperationen und Think-Tank-Netzwerken sowie mit der Rolle und dem Verständnis von Wissenschaft im Zeichen nachhaltiger Entwicklung. Ebenfalls finden Sie im Bericht den finanziellen Jahresabschluss 2021 sowie Übersichten über Publikationen und Veranstaltungen des Instituts.

The Annual Report 2021/22 offers selected insights into research, policy advice and training at IDOS. In doing so, IDOS’ experts reflect on the interconnectedness of the thematic fields of "sustainability" and "development", which have been reflected in the new name German Institute of Development and Sustainability since the Institute's name change and express IDOS' stronger focus on sustainable development processes.The thematic chapters of the Annual Report deal with questions of autocratization, multilateralism, world nutrition, loss and damage, knowledge cooperation and think tank networks as well as with the role and understanding of science in the context of sustainable development. Also included are the 2021 financial statements and overviews of the Institute's publications and events.

 

Intervention for the Third Committee (Social, Humanitarian and Cultural Issues) by the Women’s Major Group. Intervention delivered on 21 February, 2023 by WMG Global Organizing Partner, Soroptimist International’s Betty Levy.

Bette Levy, Soroptimist International & the Women’s Major Group. I want to thank the chair for keeping his word to meet again with NGOs. I thank Bobbi Nassar & Maithili Pai for their detail comments and recommendations and the many member states who attended today and supported the rights of NGOs to participate in the third committee negotiations.

When we met in October, I asked that the role of civil society be reimagined and that the Chair secure a path for NGO full & meaningful participation in the third committee.

In your closing remarks, you expressed confidence that better results were reached with face-to-face meetings.  “We must keep bridges and doors open; each of you can make a difference.” I challenge where was the space for NGOs to give input.

As Feminists, we congratulate the UK and the 70 countries for their cross-regional joint statement on SRHR and gender equality and their commitment to advance gender equality and support human rights for women and girls in all their diversity.

While we are glad that draft resolution on elimination of all forms of violence against women and girls was adopted, we are alarmed by the push back and all the regressive amendments tabled and the need for a recorded vote.

We appreciate France’s strong statement that

“It is unacceptable for women and girls to experience any form of violence under the pretense of intimacy and marriage”.

And we share the disappointment expressed by the US that there was no agreed language, for including access to health services and sexual reproductive health for women & girls with disabilities.

We noted that the Committee approved draft resolutions on early, forced and child marriage and the elimination of female genital mutilation.

Thank you for this opportunity to share our reflections on the work of the third committee.

The post Intervention for the Third Committee by WMG appeared first on Women's Major Group.

: Mon, 31 Oct 2022 HH:mm:ss
Fatima Nkhuwa is working to help her neighbourhood in Zambia. Her goal: for her neighbourhood to have a greater voice in urban planning.

A global surge of cholera cases has put one billion people in 43 countries at risk, the World Health Organization (WHO) cautioned this week.

This paper explores the effects of globalisation on social cohesion outcomes and the underlying mechanisms. A framework for reviewing the literature is offered, in which labour earnings, household expenditures and firm productivity are identified as the main channels through which economic globalisation affects cohesion, trust and pro-social behaviour. Evidence points towards substantial losses in cohesion following negative globalisation changes, altering cohesion through absolute and relative changes in employment and expenditure (and people’s perception thereof). However, evidence is thin and inconsistent; studies are limited to effects of trade (and not foreign direct investment), cover some dimensions of cohesion but not others, and often evaluate the effect of negative trade events on cohesion (while trade and foreign direct investment may offer gains to workers, households and firms, which boosts cohesion). From the available evidence, it is determined that when setting policy, it is important to address relative losses from globalisation (between groups), incorporate economic costs of social repercussions, and take on market distortions and underlying cyclical or secular trends that may amplify the effects of globalisation on cohesion.

After 30 years on the run, Italy's most wanted fugitive Matteo Messina Denaro of the Cosa Nostra has been arrested in Sicily. We look at the costs of organised crime, both economic and societal, the contagion that financial secrecy facilitates, and how to reverse the rot.

Secrecy jurisdictions and tax havens have made it possible for mafiosi to progress from crossing physical borders with bank notes stuffed in suitcases, to being able to pour unlimited amounts of money into the financial system. Dirty money in, ‘clean’ money out. That money destabilises economies and corrupts democracies, while organised crime toxifies societies. The problem is that financial secrecy and tax havens are also the friend of commerce, multinationals and wealthy, powerful people worldwide...

Featuring:

Professor of Criminology, Federico Varese

Journalist, Stefano Vergine

Surgeon in Malta and opinon piece writer, Kevin Cassar

Hosted and produced by Naomi Fowler of the Tax Justice Network

Transcript available here: https://taxjustice.net/wp-content/uploads/2023/02/Taxcast_Transcript_Feb_2023.pdf (Some is automated)

Our website (with links to further reading) is available here: https://www.thetaxcast.com 

By Nadim Matta

The principal of Al-Manar Modern School in Mount Lebanon, Jinan Shayya, was skeptical of the idea of surveying teachers’ and parents’ beliefs on education to increase family, school, and community engagement. Jinan’s school was just coming out of the COVID-19 pandemic, and Lebanon was going through what the World Bank ranked as one of the most severe financial and economic crises globally, since the mid-1800s.

Nevertheless, Jinan had agreed to organize a process for community engagement inspired by the Center for Universal Education’s (CUE) research on family, school, and community collaboration, and to survey the students, teachers, and parents at her school about their beliefs and values on education. This was part of a country-wide effort mounted by a group of Lebanese citizens to fill the void left by the government that had left schools to fend for themselves in the face of the crippling economic crisis. Nafda, a collective that aims at building a movement towards change in Lebanon’s education sector, was named by participating school principals and means “shaking the dust off” in Lebanon (or deep spring cleaning).

In the current context of Lebanon, hope will be the most precious asset that the schools will need on this journey.

The surveys of the Al-Manar School went beyond students, teachers, and parents, and it extended to community-based organizations and community activists in Ras el-Metn and neighboring villages. The surveys revealed convergence on a few themes, including:

• Prioritizing safety in the classroom and the opportunity for students to learn at their own pace and in ways that suited their learning styles and abilities.
• Prioritizing critical thinking as the main skill to acquire.
• Deprioritizing the ability to pass official exams and get good grades in class.

The subsequent conversations facilitated by Jinan and teachers of Al-Manar inspired a flood of ideas about how parents and community members could support the school to take action on jointly prioritized areas. The broader message of nafda also seemed to resonate with parents and community members—encouraging commitment and action to embed the values of engaged citizenship, good governance, and social justice in the school and surrounding community.

The conversations also led to new forms of family, school, and community engagement. The head of one of the national environmental clubs from Ras-el-Metn volunteered to organize trips so students could learn about indigenous plants in the neighboring forests. Several parents volunteered to become teacher-aides who would be trained on supporting students with special educational needs to help them learn at their own pace.

For the first time in years, Jinan and the teachers of Al-Manar felt seen, valued, and supported.

Jinan shared her experience with the other 19 schools that had joined the nafda movement, and they too embarked on a similar process of community engagement and a transformation journey of their own. Over the past 12 months, all 20 schools have experienced a steady influx of hope, in spite of the deteriorating situation around them. This hope came in large part from connecting with each other and importantly from engaging with communities in a structured and purpose-oriented way.

From Vision to Action

After the foundational nafda schools had all gone through their community engagement process, they huddled and mapped out the common themes that emerged in their conversations with their communities. The themes included experiential learning, STEM/STEAM, self-expression and student well-being, inclusive and equitable learning, and community service. The schools organized themselves into “learning labs,” each corresponding to one of these themes.

To make progress on their chosen themes, each school organized a 100-day challenge project in its learning lab. This is a way of designing and managing projects that fosters intense collaboration and rapid innovation, and that has been pioneered in a variety of social sectors by the nonprofit RE!NSTITUTE.

About 25 local NGOs that provide innovative educational solutions to schools and communities were mobilized to support the schools in shaping and implementing their projects. Each school team was provided a block grant that they could spend as they saw fit to advance toward their 100-day project goal. The process resembled a market space where educational innovators pitched their support to school teams, and the latter decided which organizations to work with and how to do so.

School Impact in 100 Days…

Some of the schools have completed their 100-day challenge projects, and the initial results are inspiring.

In the remote agricultural town of Hermel, the Esprits Libres school focused on experimenting with multidisciplinary learning, which was one of the themes that emerged in their community engagement process. Hermel has a long tradition as an agricultural hub, and the school chose permaculture as a thematic area for experiential learning. Students researched the topic, neighbors donated the land, and the students with help from community members and guidance from a permaculture enthusiast in the region planted and nurtured their crops in a manner to eliminate the need for artificial fertilizers and pesticides.

Working at an unprecedented pace, the Esprits Libres teachers adapted all their learning lesson plans to align with the topic of permaculture. Students were extracting theories of collaboration and social cohesion from observing the way plants, when provided an enabling environment, protected and supported each other as they grew. Students also learned math, marketing, and rudimentary business skills as they prepared to bring their produce to market. Esprits Libres parents enthusiastically bought and marketed the produce, and they explained to other farmers the virtues of permaculture that they learned from their children.

As for Jinan, the initial focus of her school was on inclusive and equitable learning. During the 100-day period, all teachers were trained on differentiated instruction by a leading regional nongovernmental organization that specialized in this area. In internal assessments, around half of K-12 students showed academic progress during the period, especially students with identified learning difficulties

Importantly, the projects infused hope in their surrounding communities, and gave teachers, students, and parents a sense of belonging and ownership of the learning process. In fact, several nafda schools experienced a spike in school registrations despite the continuing economic meltdown.

Beyond School Impact

Having intentional conversations on beliefs on education helped nafda schools connect with their communities through shared priorities and joint action to make progress on these priorities.

In the unique context of Lebanon, the process of family, school, and community engagement also helped in two more subtle but possibly even more consequential ways:

1. Creating a shared experience

The process provided a common experience for schools from around the country. This contributed to their sense that “we are all facing similar issues, and we have common aspirations.”This sense of connecting through common issues and aspirations went beyond the school principals. The students, teachers, parents, and other community members who were involved in the community engagement process and the subsequent 100-day projects also experienced this sense of connection with peers from around the country. This sense of shared purpose had been missing in Lebanon for decades, especially once one crosses regional and religious lines. As the nafda movement grows, this can have significant political implications for the country.

2. Emergence of school-community-led vision for change

With government institutions becoming “hollowed” out over the past three years and the massive departure of civil servants, it is doubtful whether the Ministry of Education has the capacity to shape a future vision for schools in the country. The community engagement process that nafda schools used became a foundation for legitimizing an emerging vision for what the “school for tomorrow” might look like in the country. This is an evolving vision that no doubt will be enriched and adapted as more schools join the nafda movement. Ultimately, a vision for the broader education system in the country may emerge from the work of nafda schools and the conversations this work inspires within and across communities, and with thought leaders in the sector. This will likely have more legitimacy and grassroots support than the various visions and strategies developed by the ministry, or with the ministry by international experts.

Fueling the journey

The nafda movement is in its early stages. The 20 founding school principals are preparing themselves and their schools to invite more schools into the movement and to support them on their journey. There is a long way to go before the movement reaches a tipping point—where the education system is on an irreversible path to a more promising future. In the current context of Lebanon, hope will be the most precious asset that the schools will need on this journey. Engaging communities and inviting them to be part of the journey is the nafda strategy for generating hope in the midst of the sea of despair currently engulfing the country.

      

In April 2019, Sudanese dictator Omar al-Bashir was ousted in a coup after nearly 30 years in power. The coup followed months of mass civilian protests against his regime.  The transition from dictatorship to democracy has been extremely rocky, but in December 2022 civilian and military leaders entered into an agreement under heavy international pressure.

Guest Hala al-Karib is a Sudanese activist, research practitioner and director of the Strategic Initiative for Women in the Horn of Africa. We kick off discussing who negotiated that December 5 agreement and its key provisions before discussing the many layers of challenges to a successful democratic transition in Sudan.

To listen to this episode on your favorite podcast player, go here. 

The post An Extremely Fragile Democratic Transition is Underway in Sudan appeared first on UN Dispatch.

By Kersten Stamm, Dana Vorisek

Investment in emerging market and developing economies (EMDEs) is projected to grow at a pace below the average rate of the past two decades through the medium term, after declining in the majority of countries during the pandemic. This outlook for investment is unwelcome news on several counts. Whether the policy priority is bolstering resilience to climate change, improving social conditions, smoothing the transition away from growth driven by natural resources, or supporting long-term per capita income growth, investment (gross fixed capital formation, or buildings, machinery, equipment, and intangible assets used for more than one year) is critical.

Broad-based investment contraction during the pandemic

As business operations were disrupted and uncertainty spiked in 2020, aggregate investment in EMDEs shrank by 1.5 percent. This was a substantially worse performance than during the previous global recession, in 2009, despite easier financial conditions and the provision of sizeable fiscal stimulus in many large EMDEs during the pandemic.

Excluding China, EMDEs suffered a far deeper investment decline in 2020, of more than 8 percent, also a worse performance than in 2009. A key difference in the experience of 2009 versus 2020 was the number of affected EMDEs. Investment contracted in about 70 percent of EMDEs in 2020, compared to 55 percent in 2009 (Figure 1).

Figure 1. Share of EMDEs with an investment contraction

Sources: Haver Analytics; World Bank; World Development Indicators.
Note: Investment refers to gross fixed capital formation.

A subdued investment recovery

Investment growth is projected to average 3.5 percent per year in EMDEs during 2022-23, and 4.1 percent in EMDEs excluding China. These projected investment growth rates are below the long-term (2000-21) average. Moreover, the subdued outlook follows not only a sharp decline during the pandemic, but also a prolonged investment growth slowdown during the 2010s as China shifted away from investment- and trade-led growth, commodity-exporting EMDEs suffered a sharp mid-decade decline in oil and metals prices, and the effects of weak economic growth and post-global financial crisis deleveraging generated spillovers to EMDEs (Figure 2).

Figure 2. Investment growth

Sources: Haver Analytics; World Bank; World Development Indicators.
Note: Investment refers to gross fixed capital formation. Investment growth is calculated with countries’ real annual investment in constant U.S. dollars as weights. Years of global recessions and one year after (2009-10 and 2020-21) are removed from averages shown in the bars. Sample includes 69 EMDEs.

Further, the investment recovery in EMDEs following the pandemic is proceeding much more slowly than the recovery following the global financial crisis. By 2024, four years after the 2020 recession, the level of investment in EMDEs is projected to be about 15 percent above the pre-pandemic (2019) level. By comparison, four years after the 2009 recession, investment in EMDEs was already nearly 50 percent above the pre-recession level (Figure 3).

Figure 3. Investment level in EMDEs

Sources: Haver Analytics; World Bank; World Development Indicators.
Note: Investment refers to gross fixed capital formation. On the x-axis, year zero refers to the year of global recessions in 2009 and 2020. Dotted portion of the 2020 line is a forecast. Sample includes 69 EMDEs. 

Large investment needs

The weak investment recovery from the 2020 global recession is particularly concerning because EMDEs’ investment needs are substantial. Building resilience to climate change and putting countries on track to reduce emissions by 70 percent compared to current levels, for instance, is estimated to require an additional investment of 1 to 10 percent of GDP annually between 2022 and 2030 in EMDEs, with higher investment needed in low-income countries. To achieve the infrastructure-related Sustainable Development Goals, EMDEs would need to invest 4.5 to 8.2 percent of GDP annually during 2015-30, depending on policy choices and infrastructure service quality. Most of this amount would go to transport and electricity.

The benefit of policy reform

A challenging global financing environment and constrained fiscal space will make boosting investment in EMDEs challenging. Yet a comprehensive set of fiscal and structural policies, tailored to country circumstances, can help.

Spending on public investment can be boosted by reallocating expenditures toward growth-enhancing investment, improving public spending efficiency, or better mobilizing domestic resources. Private sector participation in filling investment needs is crucial in most EMDEs, but attracting such investment requires a sufficient regulatory and operating environment.

Setting appropriate and predictable rules relating to investment decisions and encouraging firm formalization can promote investment. Simplification of border procedures and elimination of unnecessary duties can increase trade flows, with associated benefits for investment. Development of digital infrastructure and capabilities and modernizing infrastructure to withstand climate change, two priority areas for many EMDEs, can be advanced with private sector involvement.

Figure 4. Investment growth in EMDEs around reforms

Source: PRS Group International Country Risk Guide (ICRG); World Bank.
Note: Investment reform events are derived from the ICRG “investment profile,” which includes three subcomponents: contract viability/expropriation, profit repatriation, and payment delays. Bars show the increase in investment growth around a reform spurt or setback at t=0 relative to the countries not experiencing a reform spurt or setback. Vertical lines show the 95 percent confidence interval.

Over the past four decades, countries with investment policy reform spurts have been found to be associated with significantly higher investment growth—by about 6 percentage points, on average—relative to non-reforming countries during the same year, while reform setbacks are associated with about 7 percentage points lower investment growth (Figure 4). Reforms do make a difference.

      

The international community needs to rapidly agree on a new debt relief programme worth $148 billion by 2029 to avoid a new debt crisis, the United Nations has argued ahead of a key G20 summit on international finance. 

The lake Naivasha basin in Kenya acts as a lifeline for many local communities; yet it faces serious challenges, including unsustainable agriculture and land use as well as woodland destruction. Such practices threaten the basin’s ecosystems, reduce the quality and quantity of water, and endanger its ability to sustain livelihoods.

Our GOALAN project, which ran from January 2018 to December 2022, aimed at making the horticultural sector in the Lake Naivasha Basin more profitable for micro, small, and medium-sized enterprises (MSMEs) through sustainable consumption and production (SCP). The project fostered the uptake of SCP practices and sustainable farming techniques which increased the farmers’ yields and incomes. Further, it promoted the production of food that is safe for human consumption while also taking care of the environment.

Trainings and capacity building

The GOALAN project trained 146 smallholder farmers in the basin on climate smart and sustainable farming practices, integrated pest management, record keeping, enterprise farming, financial credit access, market linkages, and post-harvest management. The MSMEs have been trained on efficient water use, soil and water conservation, agroforestry, the use of certified seeds, optimal use of organic fertilizers, post-harvest handling, social welfare and more. To ensure that knowledge is passed on to other MSMEs beyond the project cycle, the GOALAN project has created a pool of ‘change agents’ through a Trainer of Trainer (ToT) programme.

Creating networks

GOALAN has also strengthened the entrepreneurial and marketing skills of MSMEs and connected them to predictable and reliable markets, thereby increasing their income and reducing food waste caused by post-harvest losses. The project has linked the farmers with local and international markets and established a solar-powered retail shop close to the Naivasha highway in Kenya, where the farmers can now sell their sustainable produce. Through a farmer group formed within the framework of the project, the MSMEs have signed contracts with various hotels, processing companies, and fresh fruit and vegetable export companies for the supply of sustainable produce. The project also conducted a local and international market analysis that gave the MSMEs a deeper insight into their target markets.

Facilitating access to finance

The project also supported MSMEs with financial management and business planning skills in order to better negotiate and develop green business plans for financing. Additionally, the MSMEs have been linked to microfinance institutions and commercial banks to enable them to access finance.

Sustainable horticulture certification

The 146 farmers trained under the GOALAN project came together, forming the Lake Naivasha Basin Sustainable Horticultural Farmers group. This group underwent rigorous food safety production training and made history in 2022 as the first farmers’ group in Kenya to be awarded the Kenya Standard (KS) 1758 certification. The certification is a code of practice for the horticulture industry and a Kenyan Ministry of Agriculture standard of quality for food safety. This will enable MSMEs to access additional markets.

MSMEs run by youth and women were supported with equipment, including a greenhouse, certified seeds, a water tank, drip irrigation kits and a solar-powered water pump to further boost their uptake of SCP practices and increase their resilience.

The project has also created awareness among public institutions and authorities and facilitated dialogue among key stakeholders from both the public and private sectors to promote green horticultural products and green public procurement practices in the country.

To learn more about the project activities and outcomes, please check out the GOALAN project infographic.

The GOALAN project was funded by the EU SWITCH Asia Programme and implemented by the CSCP and WWF Kenya.

For further questions, please contact Kartika Anggraeni.

The post The GOALAN Project Trained 146 Kenyan Farmers on Sustainable Production and Consumption Practices appeared first on CSCP gGmbH.

Developing economies could secure up to $148 billion in savings if the international community restructures their existing debt and expands access to future affordable finance, the UN Development Programme (UNDP) said in a policy brief published on Wednesday.

By M. Ayhan Kose, Franziska Ohnsorge, Kersten Stamm, Naotaka Sugawara

Growth and inflation have unexpectedly helped lower government debt-to-GDP ratios in many countries since early 2021. However, government debt is still elevated and fragile in its composition, and the magic of growth and inflation is unlikely to last long. To reduce debt in a lasting manner, growth-boosting reforms and, in some countries, debt relief are needed.

During the 2020 global recession, government debt rose to multi-decade highs, marking the largest jump in five decades. Since early 2021, some of this government debt surge has been unwound, as the latest update of the World Bank’s Cross Country Database of Fiscal Space suggests. The decline in debt has in part reflected the impact of strong growth and elevated inflation of the past two years.

Stronger growth and higher inflation in 2021-22

2021 brought a record-strong global growth rebound from the collapse in activity in 2020. Global and advanced-economy growth in 2021 reached 25-year highs of 5.9 percent and 5.3 percent, respectively. In 2022, however, widespread and rapid monetary policy tightening and the impact of the Russian Federation’s invasion of Ukraine on commodity markets weighed heavily on the global economy. Global growth decelerated sharply by 3 percentage points to 2.9 percent in 2022.

The recovery lagged somewhat in emerging market and development economies (EMDEs) but, even in EMDEs, growth at 6.7 percent in 2021 was almost one-half above its 2000-2019 average. Like in advanced economies, growth in EMDEs also slowed sharply in 2022 but was still above its 2000-19 average in more than one-third of EMDEs. Major exceptions were China, where COVID-related measures hindered growth, and Russia and Ukraine, where the war severely disrupted activity.

Since its pandemic trough in May 2020, global inflation has risen sharply. By December 2021, global inflation had increased to 5.6 percent from 1.2 percent in May 2020 before reaching a 27-year high of 9.6 percent in October 2022. Since then, it has eased somewhat (to 9.1 percent in December 2022), but inflation is now running above target in all inflation targeting advanced economies and EMDEs.

Surprise, surprise: Debt is coming down

Government debt declined between 2020 and 2022 in nearly 65 percent of countries, including more than 70 percent of advanced economies and 60 percent of EMDEs. In advanced economies as a whole, government debt declined to 112 percent of GDP from a five-decade high of 125 percent of GDP in 2020. Among EMDEs, declines in debt in the majority of EMDEs were offset by large increases in some large EMDEs. As a result, among EMDEs as a whole, government debt remained broadly steady at 64 percent of GDP in 2022.

Strong growth and high inflation have played key roles in reducing debt-to-GDP ratios since 2020. Rapid growth and high inflation improve nominal incomes that are subject to taxation. For a given nominal government debt stock, the government of a faster-growing and higher-inflation economy is therefore in a better position to raise the revenues needed to honor obligations: It has a larger “debt-carrying capacity.” This is captured in a falling government debt-to-GDP ratio when growth and inflation are high.

A simple accounting decomposition illustrates this impact of growth and inflation on debt. In this decomposition, two counterfactual debt-to-GDP ratios are calculated for each country: One assuming its average nominal GDP growth over 2010-19 and a second one assuming average 2010-19 real GDP growth. These counterfactuals are compared with the actual path of the debt-to-GDP ratio. The difference between the actual debt-to-GDP ratio and the second counterfactual ratio (with average 2010-19 real GDP growth) is attributed to above-average growth; the difference between the two counterfactual ratios to inflation.

This exercise suggests that, in 2021, above-average growth shaved at least 3 percentage points of GDP off advanced-economy debt (Figure 1A). In EMDEs other than China, Russia, and Ukraine, it shaved at least 1 percentage point of GDP off debt (Figure 1B). In that year, when inflation was just beginning to accelerate, above-average inflation reduced debt-to-GDP ratios by just over 1 percentage point in advanced economies and around 1 percentage point in EMDEs.

Figure 1. Contributions to government debt reduction A. Advanced economies B. EMDEs excluding China, Russia, and Ukraine

Source: Kose, Kurlat, Ohnsorge, and Sugawara (2022).
Note: The contribution of growth is defined as the difference between the change in the government debt-to-GDP ratio assuming real GDP growth had been its country-specific 2010-19 average and the actual change in the government debt-to-GDP ratio. The contribution of inflation is defined as the difference between the change in the government debt-to-GDP ratio assuming nominal GDP growth had grown at its country-specific 2010-19 average and the change in the government debt-to-GDP ratio assuming real GDP growth has been its country-specific 2010-19 average. “Other” includes factors such as fiscal consolidation and valuation changes. U.S. GDP dollar-weighted averages.

In 2022, however, as inflation soared and growth stalled, above-average inflation shaved at least 4 percentage points off government debt in advanced economies and over 1 percentage point in EMDEs. In contrast, the impact of above-average growth was negligible in advanced economies as well as EMDEs.

Over the two-year period from 2020 to 2022, inflation therefore reduced the debt-to-GDP ratio for advanced economies by almost 6 percentage points of GDP, while economic growth had about half the impact. For EMDEs excluding China, Russia, and Ukraine, above-average inflation and growth lowered debt-to-GDP ratios by more than 4 percentage points—almost 3 percentage points of GDP due to inflation and more than 1 percentage point of GDP due to growth.

This exercise assumes that the nominal stock of government debt is unchanged across scenarios. In practice, however, higher growth and inflation also helped raise revenues and narrow fiscal deficits, thus reducing the need for government borrowing. Hence, the estimates cited here can be considered lower bounds.

Don’t celebrate yet

While growth and inflation helped improve debt-to-GDP ratios over the past two years, significant debt-related challenges remain.

Figure 2. Rise in government debt and debt distress A. Countries with a higher debt-to-GDP ratio in 2022 than in 2019 B. EMDEs in high debt distress or near high debt distress

Sources: Kose, Kurlat, Ohnsorge, and Sugawara (2022).
Note: A. Yellow line indicates 50 percent. B. Debt distress is defined as a score of less than 6 in the average long-term foreign sovereign debt rating.

• Still elevated debt. Government debt remains higher than its 2019 level in about three-quarters of countries following the unprecedented fiscal stimulus during the COVID-19 pandemic (Figure 2A). In 2023, slowing growth and tightening financial conditions raise the risk of debt distress in EMDEs as servicing debt is becoming more costly. In fact, rating agencies already rated 23 EMDEs at being in or near debt distress at some point in 2022, the largest number of countries in more than two decades (Figure 2B). Among the poorest countries in the world, more than half of low-income developing economies are already in, or at high risk of, debt distress.
• Still risky debt. The composition of government debt has not materially improved since 2020. In the average EMDE, foreign currency-denominated debt still accounted for nearly 50 percent of government debt in 2022 (Figure 3A); nonresident-held debt accounted for about 45 percent of government debt (Figure 3B). This exposes EMDEs to the risk of rising debt servicing cost because of currency depreciation or loss of international investor confidence.

Figure 3. Composition of EMDE government debt A. Share of foreign currency-denominated debt B. Share of nonresident-held debt

Source: Kose, Kurlat, Ohnsorge, and Sugawara (2022).
Note: Blue bars denote unweighted averages, and yellow whiskers interquartile ranges. A. Data for 31 EMDEs. B. Data for 43 EMDEs.

• Weaker growth in horizon. Consensus forecasts anticipate a plunge in global growth to 1.6 percent in 2023 from 2.9 percent in 2022. Longer-term trends also point to weaker growth in the 2020s than in the 2010s. Clearly, governments will not be able to rely on growth alone to lower debt levels.
• Higher borrowing costs. Headline inflation is anticipated to fall as a result of declining energy prices and slowing growth. However, even if headline inflation declines, major central banks will likely keep interest rates high until they see a sustained decline in core inflation. This may present challenges in rolling over or servicing debt in countries with high debt. Were inflation to remain high instead, depreciation pressures and a flight to safety would likely put upward pressure on government debt in some EMDEs.

Reducing debt: What needs to be done

There is no magic bullet to reduce debt levels quickly, but domestic policymakers and the international community can take several supportive measures.

• Policy reforms to deliver strong and sustained growth. Supply-side reforms that lift growth in a lasting manner without causing inflation pressures can help sustainably lower debt. These include reforms to business climates and governance that foster private investment without incurring large fiscal cost,  better spending efficiency, and domestic revenue mobilization to boost growth dividends from public spending.
• Policies to maintain low and stable inflation. Inflation cannot be a lasting solution to deal with high debt because economic agents adjust their behavior once high inflation seeps into inflation expectations. Once they reckon that high inflation is here to stay, they adjust their interest rate expectations, wage demands, and pricing strategies accordingly. Even if actual inflation eases, higher inflation expectations would make rolling over short-term debt or additional borrowing to fund fiscal deficits costly. Weaker growth and persistently high inflation rates could put debt-to-GDP ratios on a rising trajectory.
• Debt relief in some cases. The international community also needs to bolster efforts to reduce debt distress and attenuate the risk of debt crises in lower-income developing economies. Debt restructuring at an early stage can help avoid the long and costly adjustment process that sometimes accompanies more incremental efforts and can result in more favorable outcomes for both borrowers and lenders.

      

By José Weinstein, Juan Bravo

Education in Chile has important challenges of quality, equity, and social integration.1 For decades, policies tried to respond to these concerns with a high-stakes accountability institutional framework, which has not had success. The underlying vision of educational quality was limited. The assessment system in place privileged cognitive and academic dimensions of educational results. Socio-emotional learning had been neglected or considered secondary, without an infrastructure of assessment tools that allowed teachers and principals to diagnosis students’ situations and monitor their progress. The COVID-19 crisis was an opportunity for change: Students’ socioemotional needs were a main concern for schools and society, and the regular accountability system based on standardized tests was interrupted. Subsequently, the Comprehensive Learning Diagnosis (DIA) was launched by the Education Quality Agency.

The DIA is a voluntary assessment tool made available to all Chilean schools. The DIA promotes the comprehensive development of students, providing timely information and guidance to internally monitor students’ learning in the academic and socio-emotional domains at several points during the school year. Specifically, with respect to socio-emotional learning, three areas were considered: personal, community, and citizenship. In each of these areas, a set of socioemotional skills were defined, operationalized, and became possible to monitor by school communities. The DIA also collects students’ opinions of school management practices regarding socio-emotional skills.

The DIA has received a wide acceptance in school communities. Despite being voluntary, an ample majority of schools decided to participate. The information collected from the DIA allows for practical use by principals and teachers. Moreover, the DIA provides the opportunity for students to inform school management. The new Chilean government has decided to strengthen DIA as an important component in a four-year national plan for reactivating academic and socio-emotional learning in schools. The previous high-stakes accountability system, which involved external assessments, has been suspended and is under discussion.

The DIA experience has shown that critical social and educational situations can provide fertile ground to motivate deep and rapid transformation, if an educational actor (in this case the Education Quality Agency) is capable of enacting a pertinent, timely, and practical response to school needs. The DIA is not only an example of productive uses of students´ assessment by schools, but also a demonstration that it is possible to build an institutional arrangement among local, intermediate, and national levels of school systems, where a vertical hierarchy is changed by a collaborative relationship based on local agency, mutual trust, and differentiated technical contributions.

The summary report “Transforming education for holistic student development: Learning from education system re(building) around the world” lays out 10 key lessons for transforming education systems, which are all exemplified in this case study. In particular, this case study highlights the need to:

 

1. Monitor practice and performance: Conduct consistent, ongoing monitoring of practice and performance for continuous improvement and professional learning.

 

2. Balance common conventions with local discretion: Balance common systemwide conventions with the need for local discretion to promote and encourage reform.

 

3. Build social infrastructure: build a social infrastructure that engages stakeholders about holistic student development and the entailments for instruction.

Download the full case study».

      

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