Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
Domestic Public Resources in the Arab Region
Niranjan Sarangi
Economic Development and Integration Division
Beirut, 8 May 2019
Expert Group Meeting - “From plan to implementation for
achievement of the Sustainable Development Goals: Budgeting in
support of effective institutions”
Page 2 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Mobilizing domestic public resources
Financial
• Revenues (Tax revenues, oil & gas revenues, other non-
tax revenues)
• Illicit financial flows
• Debt
• ODA
Non-Financial (Technology, Trade, Capacity building,
Systemic issues)
This presentation focuses on financial resources.
Page 3 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Revenues, as a share of GDP, widely differ across regions:
Arab oil-rich countries noted significant decline in revenues in recent
years; Arab oil-poor countries are among low performers
0
10
20
30
40
50
60
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Pe
rce
nt
GD
P
Arab countries
Arab oil-rich countries
Arab oil-poor countries
Advanced economies
European Union
Emerging market anddeveloping economies
Latin America and theCaribbean
Sub-Saharan Africa
Source: Sarangi (2016). Data updated from IMF WoRLD 2019 & WEO database 2019.
Total revenue (% GDP) across regions in the world
Page 4 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Tax revenues, as a share of total income, remain far below
potential across most Arab States
Oil-poor countries (Tax/GDP) %
Public budgets are largely reliant on tax resources
Oil-rich countries (Tax/GDP) %
Public budgets are largely reliant on oil and gas rents
Source: ESCWA (2017). Rethinking Fiscal Policy for the Arab Region. E/ESCWA/EDID/2017/4. Updated data based on IMF WoRLD.
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Comoros Djibouti
Egypt Jordan
Lebanon Mauritania
Morocco Sudan
Syrian Arab Republic Tunisia
Yemen Arab oil-poor countries
0
5
10
15
20
25
30
35
40
45
50
2005200620072008200920102011201220132014201520162017
Algeria Bahrain
Iraq Kuwait
Libya Oman
Qatar Saudi Arabia
United Arab Emirates Arab oil-rich countries
Page 5 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Mobilization of tax revenues remain inequitable;Increase in tax collections relied mostly on tax reforms in goods and services, which
imposes a greater burden on the poor and middle-class
Composition of tax revenue (% share) Burden of direct tax on income deciles in
Jordan (an example)
Source: ESCWA (2017). Rethinking Fiscal Policy for the Arab Region. E/ESCWA/EDID/2017/4.
Updated data based on IMF WoRLD.Source: Sarangi et al. (2015), based on HEIS data from
ERF’s Open Access Micro Data Initiative (2014).
0
1
2
3
4
5
6
1 2 3 4 5 6 7 8 9 10
Direct taxes and contributions 2008
Direct taxes and contributions 2010
Direct taxes and contributions 2013
31.0 35.9 31.0
9.8 14.8 17.1 17.2 19.4 21.2 16.7 18.5
40.5
13.012.6
12.9
4.33.7
4.5
20.3 16.1 16.618.7 20.5
1.01.6
1.2
2.22.5
2.5
3.5 7.4 7.40.1
0.3
10.87.1
7.4
17.4 7.97.0
12.2 3.8 3.7
9.08.6 3.5
44.2 42.8 47.6
66.3 71.1 68.9
46.853.3 51.1 55.4 52.1 56
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2014 2015 2005 2014 2017 2005 2014 2017 2005 2012 2017
Egypt Jordan Morocco Tunisia
Corporate income Individual income Property Trade Goods and services
Page 6 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Public finance is under pressure across the region
-40
-20
0
20
40
60
80
100
120
140
160
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
% G
DP
Oil-rich (Fiscal balance)
Oil-rich (Current Account balance)
Oil-rich countries
-12
-10
-8
-6
-4
-2
0
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Oil-poor (Fiscal balance)
Oil-poor (Current Account balance)
Both fiscal and current account balances
show worsening trends;
Oil revenues remained unpredictable
Debt increased significantly in some parts of
GCC, such as in Bahrain
Oil-poor middle income countries
Worsening fiscal balances
High public debt
Increasing non-concessional external debt
Source: UNESCWA (2017). Rethinking Fiscal Policy for the Arab Region
Page 7 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
ODA to critical sectors that matter for the SDGs is shrinking; but
increased to conflict affected countries for humanitarian aid;
in-country refugee costs
91.7%
55.1%
46.0%38.8%
34.8%29.4%
16.1%
0.6% 0.4% 0.4%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Syrian
Arab
Republic
Iraq Yemen Somalia Lebanon Palestine Jordan Egypt Morocco Tunisia
2010 2013 2016
12.3%
13.0%11.4%
8.1% 8.3%
7.2% 6.6%6.9%
5.8%5.9%
3.2% 5.1%
5.8% 4.3%4.2%
3.7%3.4%
2.9% 3.1%2.8% 2.2%
0%
20%
40%
60%
80%
100%
2010 2011 2012 2013 2014 2015 2016
Humanitarian aid Commodity Aid Education EnergyTransport & Storage Water Supply & Sanitation Production sectors Multi-sectorHealth Other
Source: UNESCWA 2018b
Source: OECD 2018b
Page 8 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Illicit financial flows constitute a significant
drain of resource
-
10
20
30
40
50
60
70
80
90
2010 2011 2012 2013 2014 2015
Bil
lion
s of
U.S
. D
oll
ars
Trade
Misinvoicing
Outflows
Illicit Hot
Money Narrow
Outflows
Foreign Direct
Investment
Inflows
Official
Development
Assistance
Inflows
FDI & ODA
Inflows
ILLICIT FINANCIAL FLOWS VS. FDI & ODA INFLOWS TO THE ARAB
REGION
Increase in trade misinvoicing
in non-oil trade amounting to
USD 482.7 billion (aggregate
between 2008 and 2015).
Nearly three quarters of illicit
outflows (IIFs) are associated
with trade misinvoicing.
Since 2014, IIFs have
outstripped the combined
aggregate of total ODA and
FDI inflows into the region.
Source: UNESCWA 2018b
Page 9 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2010 2011 2012 2013 2014 2015
Bil
lio
ns
of
USD
Predicted Realized
- 2.00 4.00 6.00 8.00
10.00 12.00 14.00 16.00 18.00
2010 2011 2012 2013 2014 2015
Bil
lio
n o
f U
SD
Predicted Realized
-
5.00
10.00
15.00
2010 2011 2012 2013 2014 2015
Bil
lio
ns
of
US
do
llar
s
Predicted Realized
-
10.00
20.00
30.00
40.00
50.00
2010 2011 2012 2013 2014 2015
Bil
lio
n o
f U
SD
Predicted Realized
Iraq Syria
Yemen Libya
Conflict-affected countries lost significant revenues
ESCWA (2017). Rethinking Fiscal Policy for the Arab Region. E/ESCWA/EDID/2017/4.
Page 10 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
In the Arab region, greater income has not meant better
governance
Algeria BahrainComoros
DjiboutiEgypt
Iraq
JordanKuwait
Lebanon
LibyaMauritania
Morocco
Oman
Qatar
Saudi ArabiaSudan Syrian Arab …
Tunisia
United Arab EmiratesState of Palestine
Yemen
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00
Go
vern
ance
Ind
ex
(Ru
le o
f la
w, V
oic
e an
d A
cco
un
tab
ility
)
GNI Index
Source: K. Abu-Ismail, A. Kuncic and N. Sarangi (2016). Governance-adjusted Human Development Index: The case for a broader
index and its implications for Arab States. ESCWA Working Paper. E/ESCWA/EDID/2016/WP3.
Note: Data pertain to year 2013
ESCWA (2017). Rethinking Fiscal Policy for the Arab Region. E/ESCWA/EDID/2017/4.
Page 11 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Fiscal policy response to rising debt in the oil-poor countries is
insignificant, indicating lack of adherence to fiscal rules
-6-4
-20
2
Pri
mary
ba
lan
ce to
gdp
40 50 60 70 80 90 100 110 120 130 140 150 160 170 180
Fitted line: mean Fitted line: median
mean primary balance median primary balance
Lagged debt to gdp
The fiscal reaction function, a measure of overall fiscal policy response
to public debt, shows that primary balances continue to decline until
about 90 percent of debt to GDP ratio in the previous year
Source: N. Sarangi and L. El-Ahmadieh (2017).
ESCWA (2017). Rethinking Fiscal Policy for the Arab Region. E/ESCWA/EDID/2017/4.
Page 12 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Projected fiscal adjustments largely rely on cutting
expenditure, revenues share in GDP is sluggish
10
30
50
70
90
110
2016 2017 2018 2019 2020
Jordan
Debt/gdp Rev/gdp Exp/gdp
10
30
50
70
90
110
130
150
2016 2017 2018 2019 2020 2021
Lebanon
Debt/gdp Rev/gdp Exp/gdp
10
30
50
70
90
2017 2018 2019 2020 2021 2022
Tunisia
Debt/gdp Rev/gdp Exp/gdp
10
30
50
70
90
110
2017 2018 2019 2020 2021
Egypt
Debt/gdp Rev/gdp Exp/gdp
10
30
50
70
2016 2017 2018 2019 2020 2021
Morocco
Debt/gdp Rev/gdp Exp/gdp
Source: IMF Article IV reports, latest years of respective countries.
ESCWA (2017). Rethinking Fiscal Policy for the Arab Region. E/ESCWA/EDID/2017/4
Page 13 © Copyright 2014 ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without a written permission
Expand and sustain fiscal space by putting
systematic efforts on raising tax revenues
• Harnessing the potential of tax revenues is key to mobilize domestic resources
(Setting short and medium term fiscal rules can help)
• Improving tax fairness – Increase progressivity especially in direct tax collection,
harness potential tax base (property tax/wealth tax, non-wage incomes)
• Improving effectiveness of tax systems -- Administrative reforms to control tax
evasion, mandatory filing of tax (at residents’/businesses’ end)
• Controlling illicit financial flows necessitates strengthened international cooperation
(also adjusting domestic tax laws)
• Oil-rich countries need to diversify revenues through promoting economic
diversification and better public finance management, including debt and SWFs
• Improving expenditure efficiency is essential to meeting greater social expenditure
needs toward achieving the SDGs
• Enhancing progressivity in fiscal redistribution and better targeting public budgets
to social development priorities
• Monitoring social expenditure and reprioritizing: ESCWA tool on Social
Expenditure Monitor (SEM) is currently being developed
Thank you