Macroeconomic Developments and Prospects in Low-Income Countries - 2021

Reducing poverty and improving equity
Posted Apr 29, 2021 | IMF

There are signs of long-lasting economic scarring effects due to a permanent lowering of actual and potential GDP growth, reversing gains made in poverty reduction, increasing inequality, and damaging human capital. In this paper, the IMF provides an estimate of the additional financing that would enable LICs to step up their spending response to COVID-19, also to meet vaccination needs, while rebuilding, or maintaining external buffers to enhance resilience. It estimates the LICs’ financing needs up to 2025 if they are to resume and accelerate their income convergence with advanced economies, and discusses a mix of financing options - concessional financing from the international financial institutions, grants and loans from bilateral donors, private financing and debt operations – while emphasizing the need for domestic reforms in LICs to foster growth, enhance private investment, raise public revenues, and increase efficiency of spending.


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