Unveiling the Global Public Finance Partnership: First Partners, First Projects

Good morning. Welcome. Today we are unveiling the Global Public Finance Partnership, or GPFP. The GPFP is the IMF's new financing vehicle for capacity development in public finance. The first Deputy Managing Director, my boss, Gita Gopinath, will explain the significance of the partnership. I just want to say that this is a very timely initiative, given elevated debt and deficits, you may have seen some headlines yesterday, pressures on public spending and political resistance to taxation. For many countries, fiscal and financial constraints are binding on economic growth and development. With the GPFP, we are changing the approach and scaling up our technical assistance and training support to countries on fiscal matters, building on the solid experience gained through multiple thematic funds, including the Revenue Mobilization Thematic Fund, the Managing Natural Resource Wealth Fund and the Tax Administration Diagnostic Tool, better known as TADAT. I want to thank all the development partners that have been making this work possible. Following the remarks from Gita Gopinath, whose numerous responsibilities at the fund include overseeing capacity development, we will hear from representatives of our development partners, as well as from two of the first countries that will benefit from the GPFP. We will then do a group picture with the first donors to the GPFP. And if I would be a master manager of supply chains, Gita Gopinath would be walking in the room right now. But I'm failing miserably in my just-in-time management. Now, Frank is somebody who's managing the process, and at some time he will tell me to shut up. While he does not, let me continue talking to you about issues that I believe are important and may be of relevance to you. One of my points when I think about capacity development around the world is the centrality of tax capacity. I've learned that tax capacity is not only the most important pillar of state capacity, public administration capacity, that then allows spending to support the country's own development programs, but it's also a pillar of financial development and financial stability. So, in a sense, in my mind process, it all starts with tax. But it cannot end with tax. Tax revenues have to be spent, and they have to be spent in on priorities. And now, just in time, Gita Gopinath. Thank you so much, and I'm sorry for running a little bit late. Again, thank you, Vitor, and welcome to all of you. Thanks very much for joining us today as we unveil the Global Public Finance Partnership. The GPFP comes at a critical moment. The past few years of shocks have left countries with high levels of debt, with fewer resources, amid high interest rates and low growth. And low-income countries have been especially hard hit. Their output is around eight percent below the pre-pandemic trend, and their cost of debt servicing has roughly doubled over the last 15 years. At the same time, public spending pressures are increasing from the climate transition to achieving the sustainable development goals. In this difficult environment, mobilizing domestic revenue and managing public spending effectively are essential to rebuild buffers, prepare for future shocks, and deliver sustainable development. The GPFP can help by providing capacity development support on both revenue and spending together under one roof. Now, this is especially critical for emerging markets and low-income countries. With better tax design and stronger public institutions, these countries can improve their tax-to-GDP ratios by up to nine percentage points on average with sustained reform efforts. Now, this kind of revenue boost over time, along with more efficient spending, can help governments meet the demanding environment ahead and invest in their critical transformations that are needed for the future. To help countries prepare for those transformations, the GPFP integrates other cross-cutting priorities into its work, including climate change, gender, inclusion, and digitalization of fiscal operations. The GPFP's initial work plan, which includes more than 40 projects, primarily serves low-income countries and fragile and conflict-affected states such as sub-Saharan Africa, the Middle East, Asia, the Pacific, the Caribbean, and South America. The launch of this work plan would not be possible without the support of our first partners, including Belgium, France, Japan, Germany, Luxembourg, the Netherlands, Sweden, Switzerland, and the United Kingdom. And we are working with several other interested partners to meet our ambitious funding targets of $200 million for the next five years. As we begin our first projects through the GPFP, we will continue to serve the evolving needs of our membership. Thank you, and welcome again. Thank you very much. I'm First Deputy Managing Director Gita Gopinath. I am Frank Bousquet. I am Deputy Director of the IMF Institute for Capacity Development in charge of global partnership, and it's my pleasure to first recognize Victor for allowing us to gain some time and for your leadership on this agenda, and also to invite Adelaide Matelani, Minister of Finance and Development Planning of Lesotho. Thank you. Thank you very much, Mr Chairman. It is a privilege for me to be here and to have been invited to this important panel. Let me start by saying that, indeed, the vulnerabilities that we have as developing countries and as the global economy have been unveiled much more with the recent shocks that we have suffered as the global economy. The fragmentation that our economies are facing, the rising cost of living, the transitions that we have to make to reinvent ourselves and be much more relevant in the now has shown to us the importance of capacity development in our countries. To effectively cushion the vulnerable groups in our countries and to finance sustainable development in our countries, we need to be much more impactful than before. We have lost quite a bit because of these shocks, and we have to recover quite quickly. In light of this, being a developing country or coming from a developing country, I truly commend to the Fund, Victor and Peter, this is a great initiative that we really appreciate, and I'm sure I'm speaking on behalf of the developing countries, all the developing countries, in saying that we cannot understate the importance of capacity development. Indeed, the outcomes of it are a global good. I think we've come to a realization that it is a global good, because if other countries suffer and are not able to pick up, we all suffer as the global economy. The Kingdom of Lesotho has benefited greatly in the past, and it continues to benefit from capacity development, and the assistance that we're receiving is immensely appreciated. From boosting domestic revenue mobilization to ensuring sustainable public development, we have many, many priorities and things that we have to look out for. I've just been reminded that we have just received our TADAT assessment, and because of that, we are improving our tax efficiency. In fact, Victor, you mentioned the reluctance of the officials to comply with tax authorities. I thought it's only in my country, but I'm glad you're mentioning it, that it's all over the world. For this, really, what is important in this initiative is the holistic approach that you're taking, and one that I think is much more sustainable than the way we were doing capacity development in the past, and I'm sure we're going to benefit much more. More importantly, we will see sustained initiatives, as well as sustainability and coordination in the way that we do things, and I think that sustainability is much more important, as well as continuity. You can never really say you have built enough capacity, because, as I said, even the capacity that we're building itself is a public good, because people move. This capacity and human development moves across countries, and therefore, it is important for us to realize this. With this, let me say, Chair, again, I wish to register my appreciation to the Fund and to the nine development partners that have been very, very supportive and have made commitments towards this achievement, and we hope more will come on board so that we have a better world, and more importantly, as policy makers, we get to actually do this in earnest and improve the livelihoods of our people. Thank you very much. Thank you very much, Minister. I could see your first remarks resonated very well with the audience. Thank you for recognizing the relevance of this agenda for your country, but also the holistic approach, which is quite unique for this Global Public Finance Partnership. It's now my pleasure to invite Deputy Minister Yassour Kashibaev, Deputy Minister of Economy and Finance of Uzbekistan, to come to the stage. Thank you. Good morning. First of all, thank you for inviting and giving forth to me to express our appreciation to the Fund and for establishing this introduction of this new initiative. I think it is very relevant to my country and to my region, because over the past seven years, Uzbekistan has been implementing comprehensive structural reforms, such as ethics, price, trade liberalization, transformation of SOEs and massive privatization. We're mostly catching up. We're trying to finalize our transition to the market economy and opening up to the global business and capital markets, ensuring data transparency, tax and budget reforms, introduction of fiscal rules, program-based budgeting. I can continue forever. I think it will not end, because the new challenges that we're facing in our region, ensuring sustainable growth in our country, necessitates the need for continued capacity building in the region. For instance, we also have an ambitious plan to become among the upper-middle-income countries by 2030, and we are prioritizing green economy, green growth. For instance, we are among the countries who issued SDG rebounds, green-level rebounds, in 2023. We introduced a special vehicle. It is participatory budgeting, where this innovative approach allows to improve the transparency, and a fully digitalized platform is designed to count the votes for the initiatives by the citizens, so it's more transparent. Five percent of the local budgets are allocated to fund the direct initiatives by the citizens, and we have country climate development reports, we have ICRAFs, and we are working on MRV, and all this indicates that we are trying to be in the same dynamics, to face the same challenges that are facing the global economy and other countries, and I think this development needs and ongoing challenges that we are facing necessitate and indicate that this initiative is highly appreciated, and we think taking this opportunity, I would like to express our appreciation to the fund and to the management for this excellent initiative, and we hope that we will deliver all the recommendations and all the targets will be achieved, and the donors will not spend their funds for nothing. Thank you. Thank you very much, Deputy Minister. We will now, I think it was excellent to hear first from the member countries how they believe this agenda is so important at this specific time, and now of course we will hear from a few partners. Let's not forget that the majority of our capacity development activities provided by IMF are actually financed by development partners, so hearing their voice and recognizing the support and the role they play is critical. Let me now invite the Deputy Prime Minister and Minister of Finance of Belgium, Vincent van Peteghen, to come on stage. Thank you. Good morning everybody, and thanks a lot for organizing this event which highlights the importance of capacity development as one of the fund's core missions in support of economic and financial stability, and Belgium has always been a strong supporter and donor of the revenue mobilization thematic fund. We are pleased with the results that have been and are achieved, but to meet the challenges of today's complex global landscape, Belgium also welcomes the shift to a holistic approach to public finances through the Global Public Finance Partnership. We are pleased to be among the first donors of this new partnership. We believe that the new setup will allow the IMF to apply its vast expertise more effectively, and thus live up to its credo of building shared prosperity and collective resilience. The integrated approach will also reduce administrative burden for both donors and the IMF, allowing for more time and energy devoted on the substantive issues. We consider it is important not to lose sight of the revenue mobilization side of public finances. Stable and broad domestic revenues are essential for resilience of low- and middle-income countries. Many countries are still grappling with the lingering impact of the COVID-19 pandemic, and that sustainability is under pressure. They can greatly benefit from the fund's support for domestic resources. The fund's expertise is not only relevant to emerging markets and low-income countries. In recent years also, Belgium has benefited from the fund's technical advice on proposals to reform our tax system. This reinforces our conviction that the IMF is well placed to help countries strengthen their public finances. We look forward to seeing the first results of the Global Public Finance Partnership in the near future, and we will continue to be a constructive partner along the way. Thank you very much. Thank you very much, Deputy Prime Minister, for your remarks, but also for all Belgium's support, which is critical for the IMF's activities. I now invite Christophe Conné, Deputy State Secretary for International Finance of Switzerland, to come on stage. Thank you. Ladies and gentlemen, good morning. I'm honored and pleased today to be here. Taxation lies at the core of the functioning modern state. It provides most of the revenues necessary for operations of the sovereign state, be it financing for infrastructure, be it for social services, security needs, or measures to mitigate climate change or else. Tax policy and tax administration reforms have been at the forefront of Switzerland's engagement for capacity building and development since the mid-1990s. Switzerland continues to be committed to this task. Just last year, Switzerland approved about 30 million US dollars under the Swiss tax program for development. The IMF has been an important partner on this journey. We can rely on its very professional and dedicated staff in providing real impact to strengthening fiscal sustainability across the globe. Our support for the IMF capacity development is part of our wider engagement in the IMF, including with the members of our own constituency, which has been also represented here today. In this sense, we are excited to continue and renew our long-standing engagement today with a contribution to the GPFP, as this program will continue the IMF's capacity building initiatives on issues relating on domestic resource mobilization, and it will bring together, in a holistic manner, domestic revenue mobilization, public spending, as well as public financial management under one roof. As such, it may become a very powerful tool in the future to assist countries to raise revenues. The size of our contribution reflects the importance that we attach to this program. By concluding, let me thank once again for the good collaboration with the IMF, and we are looking forward to continuing working together, not only with the IMF, but also with other donor representatives that are here today. With this, please let me hand over the floor to the next speaker. Thank you very much. Thank you very much, Deputy State Secretary Koenig. I would now immediately invite Stephen Collet, Deputy Director General for International Cooperation at the Ministry of Foreign Affairs of the Netherlands. Thank you. Good morning, everyone. Making taxation work for the people is a critical task, and maybe even a foundational task for any state. It's also a challenging task. We in the Netherlands have quite some challenges still with our taxation system and getting it right, and that's why I'm super proud to be standing here on behalf of my country as a partner to this program, because it brings the best expertise in the world together to assist countries with this task. And the two aspects stand out. They have been mentioned, but I want to repeat them. Taxation and public spending are two sides of the same coin, almost literally, and this brings it together. And secondly, focus on the most vulnerable countries is essential, because their capacity is even more limited than, say, ours. So we should be focusing on those who need it most. Thank you so much for putting this together and having me here. Thank you. Thank you very much for being so clear and recognising, again, this is a one-stop shop on fiscal development, and it's so important. Last but not least, I'm very happy to welcome Elina Scheer, Chief Economist at the Swedish International Development Agency, to share the last remarks. Thank you. Sweden is a proud and long-term partner to the IMF, and we would like to congratulate the Fund for taking this initiative to consolidate the expertise of the Fund to support mobilisation of the public resources and strengthening countries' ability to spend the available resources more effectively. In the current context of the widening gap between the development funding mobilised and the needs and urgent requests to spend the money on development objectives, we need to optimise all sources of development finance, and domestic resource mobilisation is a crucial part of this puzzle. Bilateral aid flows pale in comparison when it comes to countries' own ability to mobilise resources and their importance for countries to take ownership of their own development and providing for their citizens. At the moment, the countries that are most in need are not realising this opportunity at hand, and this is why we think that the current initiative that sets a focus on the low-income countries and fragile context comes well-placed to mobilise the IMF abilities and bring them to bear in the context where they are most needed. Mobilising the resources, as has been said, is one part, but the citizens of this country have all the right to expect that the value for their money, and also that the funds are spent efficiently to serve the needs of the citizens, and the unique value proposition of this partnership is to bring those sides together to focus where the needs are the most, and also integrate some of the issues that are important to us, like gender and climate, into the same package. We have high hopes and expectations of the results of this partnership. We look forward to following that, and that's why we have also made a multi-year commitment to support that. We'd be happy to also talk to prospective other donors who would like to join this initiative, as I believe there are a couple of spots for funders still available. Thank you.