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World Bank, IMF launch joint initiative to help developing countries strengthen tax systems

Xinhua, July 13, 2015 Adjust font size:

The World Bank and the International Monetary Fund (IMF) are launching a new initiative to help developing countries strengthen their tax systems, the two international financial organizations have announced.

The announcement came ahead of the Third International Conference on Financing for Development scheduled for Monday-Thursday in Addis Ababa of Ethiopia, at which heads of state and multilateral institutions as well as private sector representatives will discuss how to scale up finances to meet the Sustainable Development Goals (SDGs).

Analysis suggests that many lower-income countries have the potential to increase their tax ratios by at least 2-4 percent of GDP without compromising fairness or growth. Raising additional revenues will allow developing countries to fill financing gaps and promote development.

"A strong revenue base is imperative if developing countries are to be able to finance the spending they need on public services, social support and infrastructure," said IMF Managing Director Christine Lagarde. "But experience shows that with well-targeted external technical support and sufficient political will, it can be done."

"We very much want to help developing countries raise more revenues through taxes because this can lead to more children receiving a good education and more families having access to quality health care," said World Bank Group President Jim Yong Kim. "If everyone pays their fair share developing countries can close their financing gaps and promote inclusive growth."

Responding to country demands, the IMF and World Bank vowed to deepen the dialogue with developing countries on international tax issues, aiming to help increase their weight and voice in the international debate on tax rules and cooperation. They are also developing improved diagnostic tools to help member countries evaluate and strengthen their tax policies.

These efforts build on the World Bank's current tax programs in over 48 developing countries and the IMF's technical assistance projects in over 120 countries. Endit