The prospect of significantly higher levels of assistance from international donors and comprehensive debt relief reinforces the need for countries to design economic programs that will accelerate their efforts to reach the MDGs. There are many policy options open to governments; here are four priorities:
First, countries must strengthen the way they manage public spending, to get the best results and ensure high standards of public accountability. Assessments of public expenditure systems carried out by the Bank and Fund point to the need for substantial improvements.
Second, good economic governance is essential. Countries must promote transparency in all financial transactions in the budget, the central bank, and the public sector at large. They should be guided by international standards and codes of best practice and take strong measures where necessary to combat and stamp out corruption. Countries rich in natural resources face the biggest challenge promoting transparent institutions.
Third, the private sector must be the engine of sustained higher growth. But World Bank studies indicate that 16 of the 20 countries with the most difficult business climates are in Sub-Saharan Africa. Thus, another challenge is to make financing accessible to small businesses, establish an effective and predictable legal system, and remove the red tape and bottlenecks that often deter both domestic and foreign investment.
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