Title page
Contents
ABSTRACT 2
BRIEFING 1: Developing countries' fiscal space and its impact on reducing poverty (SDG1) and inequality (SDG10) 5
Abstract 5
1. How does fiscal space matter for poverty and inequality reductions? 9
1.1. External policies 10
1.2. Domestic policies 12
2. Three influences on fiscal space's ability to produce poverty and/or inequality reductions 13
2.1. The political economy - choices and priorities 13
2.2. Methodology, measurements, and timeframes 15
2.3. Continued disempowerment? 16
3. Thinking ahead 17
3.1. Horizontality and trust-based partnerships 17
3.2. Supporting comprehensive digitisation 18
3.3. Understanding and setting expectations 19
4. References 20
BRIEFING 2: 'Fiscal Space in Developing Countries - A Primer' 24
Abstract 24
1. Definition and assessment 28
1.1. Growth and productive spending and their impact on fiscal space 28
1.2. Pandemics and fiscal space 29
1.3. Demographics and fiscal space 31
1.4. Climate change and fiscal space 31
2. Expanding fiscal space 31
2.1. Collect more revenues 31
2.2. Rationalise expenditures 33
2.3. Strengthening debt management 34
3. Development policy, global economic governance and fiscal space 35
3.1. The European Union and key Member States' stance 35
3.2. Perspectives of the Global South 35
4. Recommendations 36
5. References 38
BRIEFING 3: 'IMF Special Drawing Rights - A Primer' 40
Abstract 40
List of abbreviations 43
1. Special drawing rights: History, issuance and allocation 44
1.1. Context and historical overview 44
1.2. Issuance and allocation 44
1.3. The role of SDRs in development finance 46
1.4. Applications of SDR allocations: how did countries use their SDRs to recover from the pandemic? 47
1.5. The recycling to MDBs proposal 48
1.5.1. African Development Bank and inter-American Development Bank hybrid capital 49
1.5.2. SDR-denominated bond 50
2. SDRs as a development policy tool 50
2.1. The EU and Member States' stance on IMF and SDRs in development policy 50
2.2. Reforms suggested by the United Nations High-Level Advisory Board on Effective Multilateralism 51
3. Recommendations for the EP and the DEVE Committee 52
4. References 53
5. Annexes 56
Annex 1: EU Member States' holdings of SDRs, allocation and recycling commitments (in billions of SDRs, as of 31 December 2023) 56
Annex 2: World Bank Classification of Countries for the 2024 fiscal year 57
Annex 3: List of prescribed holders of SDRs (20 members as of January 2024) 60
Annex 4: IMF emerging markets list of countries 61
WORKSHOP PROCEEDINGS 62
List of abbreviations 65
1. Workshop programme 66
2. Introduction 68
3. Presentation by academic experts 68
3.1. Dr Abel Gwaindepi, Senior Researcher at the Danish Institute of International Studies 68
3.2. Dr Sanjeev Gupta, Senior Fellow Emeritus, Center for Global Development 71
3.3. Professor Mark Plant, Senior Policy Fellow, Center for Global Development 72
3.4. Dr Annalena Oppel, London School of Economics 72
4. Debate with members 73
5. Concluding remarks 76
Annex 1 - Speakers' bios 77
Annex 2 - Photos from the workshop 78
Table 1. Board-approved SDR basket currency weights at past quinquennial reviews 44
BRIEFING 1: Developing countries' fiscal space and its impact on reducing poverty (SDG1) and inequality (SDG10) 8
Figure 1. Two pathways of policies affecting fiscal space and their poverty/inequality reducing potential 10
BRIEFING 2: 'Fiscal Space in Developing Countries - A Primer' 27
Figure 1. General government fiscal deficit (percentage of gross domestic product) 29
Figure 2. General government gross debt (percentage of fiscal year GDP) 30
Figure 3. General government interest expense (percentage of total revenues) 30
Figure 4. Tax revenue, 1990-2020 (percentage of GDP) 32
Figure 5. Tax potential and tax effort, 2020 (percentage of GDP) 32
BRIEFING 3: 'IMF Special Drawing Rights - A Primer' 43
Figure 1. SDR allocations: General and special (in billions of SDRs) 45
Figure 2. Distribution of SDR allocations per income category 45
Figure 3. SDRs holdings as % of allocation on 31 December 2023 47
Figure 4. SDR usage by income category (in billions of SDRs) 48