Macroeconomics and Fiscal Management
(See also Global Practices.) One of 14 new World Bank Group Global Practices, Macroeconomics and Fiscal Management provides integrative development strategies, policy-based lending, macro data, global perspectives, real-time policy analysis, country risk assessments, and innovative projection tools.
World Bank Group and Macroeconomics and Fiscal Management
In 2014, developing countries are confronting a slow and uneven recovery from the global financial crisis; tremendous ongoing shifts in the patterns of resource, goods, and capital flows; and growing pressures to improve competitiveness. They seek to identify macropolicy frameworks that create the conditions for more rapid, more inclusive, and more sustainable growth. Some elements of those frameworks are not new—sound fiscal policy, efforts to mitigate macrovulnerabilities and promote resilience, and targeted growth strategies that identify and then build on comparative advantage, among others.
Other strategies are the subject of ongoing debates and innovations: inflation targets, capital controls, structural fiscal deficits, macrofinancial regulation, and publicly owned sources of credit—all fields in which much rethinking is taking place in the practice of macroeconomic policy. The search for new forms of internally consistent, long-term macroeconomic frameworks is ongoing and will dominate the profession—and the radar screens of policy makers—for many years.
As the only global institution with activities spanning all segments of the economy, the World Bank Group plays a unique role in identifying and supporting long-term macroeconomic policy frameworks directed toward promoting poverty-reducing growth. No other multilateral institution has a deeper understanding of the microeconomic foundations of macroeconomic policy. Because it operates across all sectors along the development spectrum, the WBG can advise on the links between sector-specific challenges (such as teacher salaries or electricity subsidies) and growth sustainability, through the fiscal impact of spending on education or power.
Moreover, the WBG is the only global institution that can deliver integrated diagnostics, strategies, and solutions for all developing countries, including fragile situations and small states. It is as applicable to resource-rich poor countries as it is to up-and-coming emerging economies dealing with "middle-income traps."
The Turkey Sustaining Shared Growth Development Policy Loan supports the country's goal of continued socially and environmentally sustainable shared growth by improving business climate, enhancing transparency, boosting labor force participation, widening access to finance and deepening Turkey's infrastructure reforms. © World Bank / Simone D. McCourtie (photographer). Permission required for reuse.
The WBG has a large and expanding menu of financial and analytical products and services in these areas, including fiscal and debt policy and sustainability; growth analytics and diversification opportunities; natural resource management; and subnational and spatial dimensions of growth, fiscal, and debt policy. This practice is responsible for 20 percent of recent World Bank commitments over the past two years. Almost all this financing is underpinned by cross-sectoral and structural policy programs that contribute to the long-term development of countries.
The Macroeconomics and Fiscal Management Global Practice is responsible for delivering analytical tools, training, and capacity building in the areas of fiscal management, macroeconomics, growth, and debt for Bank staff members and clients, as well as timely policy advice to support the following lines of work:
• Designing macrofiscal frameworks aligned with the goals of reducing extreme poverty and boosting sharing prosperity and grounded in economic, social, and environmental sustainability
• Fiscal and debt policy and sustainability, including on the effectiveness, efficiency, level, and composition of government spending
• Growth analytics and policies for starting, sustaining, and boosting growth
• Analyzing the impact of external shocks and developments on growth and the government fiscal position, including, for example, terms of trade, global crises, and longer-term issues such as population aging
In addition, the global practice contributes to the integration of policies for growth, poverty reduction, and shared prosperity.
IFC and MIGA contribute their expertise in matters relating to the private sector, particularly in supporting the growth of private businesses, trade, and environmental and social sustainability.