Working Papers

Lack of fiscal space and the risk of sovereign debt distress remain key stumbling blocks to achieving Sustainable Development Goals (SDGs) in developing countries. Because the allocation of concessional funds and debt relief is essentially reserved to Low Income countries (LICs), official financing strategies and mechanisms to support developing countries provide insufficient support to non-LICs that may need and deserve special consideration concerning official financing. This paper discusses how official financial support allocation could consider countries’ vulnerabilities in critical dimensions, with special reference to Small Island Developing States (SIDS). It explores how a…

Does digitalization reduce corruption? What are the benefits of data-driven digital government innovations to strengthen public integrity and advance the Sustainable Development Goals? While the correlation between digitalization and corruption is well established, there is less actionable evidence on the effects of specific digitalization reforms on different types of corruption and the policy channels through which they operate. This paper unbundles the integrity dividends of digital reforms that the pandemic has accelerated. It analyses the rise of integrity-tech and integrity analytics in the anticorruption space, deployed by data-savvy integrity institutions. It also assesses the…

The pandemic-induced global economic crisis has contributed to the re-emergence of sovereign default risk, especially for emerging and developing economies, and has directed attention to the impact of the institutions that are tasked with attempting to predict defaults: the international credit rating agencies. This paper describes four main challenges posed by credit rating agencies, especially from a developing and emerging economies perspective: potential bias in ratings, pro-cyclicality of ratings, governance issues and conflicts of interest, and incorporation of climate risk. It concludes with potential policy solutions addressed at ratings agencies, regulators, and policy makers.…

This paper explores the scope for Innovative Development Finance (IDF) to compensate for declining Official Development Assistance (ODA) and/or to enhance the efficiency of ODA. It shows that IDF has not helped much to increase the volume of aid. With regard to efficiency, the role of IDF-related mechanisms remains controversial. In view of the above, it may be more productive to focus on other resources available to Asia. The paper points to two such resources, namely the surpluses accumulated in the form of reserves, Sovereign Wealth Funds (SWFs), etc. and the migrant remittances. Efficient utilization of these two sources can vastly change the development finance landscape in Asia.…

This article evaluates and compares the forecasting performance of three international organizations: the United Nations, the International Monetary Fund and the World Bank. The annual forecasts made by the United Nations in the period of 1981-2011 are found to be fairly robust, in terms of bias and efficiency. In comparison, the forecasting performance of the United Nations is found to be marginally better than the other two organizations during the period of 2000-2012. However, the forecasts of all these organizations missed the Great Recession of 2009 by a large margin.

There are two major failings in policy interventions in the crisis in the US and Europe: the reluctance to remove the debt overhang through timely, orderly and comprehensive restructuring and the shift to fiscal austerity after an initial reflation. These have resulted in excessive reliance on monetary means with central banks entering uncharted policy waters, including zero-bound interest rates and the acquisition of long-term public and private bonds. This ultra-easy monetary policy has not been very effective in reducing the debt overhang and stimulating spending. It has, however, generated financial fragility, at home and abroad, particularly in the case of the US as the issuer of…