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  • The Absorptive Capacity Limit: The point where too much aid becomes bad aid

    Absorptive capacity is not fixed – theoretically, it can be improved by successful reform. Absorptive capacity can change if the underlying drivers of absorptive capacity change. An increased capacity to absorb aid can occur for various reasons, such as increased public financial management competencies or less onerous aid delivery methods that impose lower transactions costs on recipient governments.

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  • Revocable Debt Relief: Transforming a Liability into a Contingent Liability

    Some limited forms of debt forgiveness and assistance have been given to families, including through moratoriums on interest payments and arrangements for no or low-consequence on default. It has also been argued that government can influence banks directly to keep lending rates low in order to avoid increased levels of bad debts and increased social harm, which can occur when the bank is government controlled or heavily bailed out.

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  • Medium-Term Focus for Short-Term Problem Solving

    The modern medium-term and policy-based budgeting system was invented in the 1970s in Australia. It started with the use of internal medium-term fiscal forecasts of revenues and costs of existing policies. Political events then allowed these internal forecasts to transform into baselines and be published as estimates for annual appropriations

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  • The Arab World Must Invest In Its Greatest Asset – Young People

    As 2016 ends, the Arab world find itself witnessing battles in the ancient cities of Mosul and Aleppo, with uncertain futures for Iraq, Syria, Yemen, Libya – and those are just the countries with active armed conflicts. Other parts of the region face the challenges of economic stagnation or internal unrest. And still, we must.. Read more

  • Who Cares About Development Risk?

    A general view appears to be that development and fiduciary risks are “two sides of the same coin and cannot be usefully be separated”. This Development Practice Note argues that they are different, and that focusing on development risk and recognizing the trade-offs between development and fiduciary risk can result in far more cost-effective aid.

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  • The Consequences of Donor-Induced Fragmentation

    Donor-induced fragmentation of public financial management systems reduces reputation risk, but it unambiguously increases development risk – the longer-term risk of not achieving development objectives. This Development Practice Note proposes a four-part solution for dealing with this risk.

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  • What Determines the Quality of Public Finance Systems?

    Why do some ministries of finance around the world consistently deliver good results, while others cannot make much progress? This Development Practice Note looks at the three most common answers to that question, and explains why only one is correct.

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