Developing countries will need to regain momentum in achieving the MDGs by
Being in the driver seat
Implementing significant policy reforms
Ensuring better service delivery
However, better policy will not be enough
The shock is external, not due to widespread policy failure
Low-income countries have few options and resources
Spending strategy for poor countries in an adverse economic environment (Maquette for MDG Simulations − MAMS)
In a low case (low-aid) simulation with
low GDP growth
limited recovery in foreign aid, foreign direct investment, remittances, or world prices
government reductions in social spending
poverty and other MDGs will deteriorate compared to a base case of economic recovery.
With better expenditure management and increased domestic taxation (low-aid internal 1) , MDGs will deteriorate less, except for poverty.
The additional revenue eases the fiscal situation, enabling greater public spending or improving debt and fiscal sustainability, but will have negative effects on private spending and poverty, which need to be offset by better policy and service delivery.
More results will be provided in the report
Better service delivery and a global response are needed
Fiscal constraints bring the importance of ensuring that public spending is as efficient as possible.
If productivity rises ( low-aid-internal2 ), progress toward the MDGs improves relative to the low-aid-internal 1 and the low-aid cases :
However, better policy and internal effort would not restore the MDG trajectory to that of the recovery ( base case ).
Better MDG results will require strong global recovery, trade expansion and openness, affordable capital and aid flows, and sustainable strong responses from international financial institutions.