posted on 2024-09-05, 21:34authored byMax Gallien, Adrienne Lees, Giulia Mascagni
Lower-income countries have huge financing needs. While tackling the climate
challenge and achieving the Sustainable Development Goals requires substantial capital
investments, the Covid-19 epidemic has highlighted an urgent need for spending on
health and social protection. One recent report estimated the investment needs for
low- and lower-middle-income countries (henceforth, lower-income countries) at US$3
trillion per year by 2030. This represents about 7 per cent of these countries’ combined
GDP, and is a herculean challenge, particularly for low-income countries. While loans
have long played a central role in bridging the financing gap, rising interest rates have
made this even more difficult, and debt servicing costs are increasingly making up
frightening proportions of government spending. And yet, on average, low-income
countries raise just under 13 per cent of GDP in taxes, versus over 35 per cent on
average in OECD economies, and the rate of growth of their tax ratios remains slow.
Funding
Default funder
History
Citation
Gallien, M.; Lees, A. and Mascagni, G. (2024) 'Getting Targets Right: How Much Revenue can Lower-Income Countries Raise?', ICTD Policy Brief 6, DOI: 10.19088/ICTD.2024.016