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Growth has held up better in Egypt than in neighbouring countries until recently but inflation has reached very high levels and financing conditions have tightened along with foreign currency shortages. In this context, Egypt is stepping up economic reform efforts. The exchange rate needs to become more flexible with monetary policy geared to bring inflation down to target. High public debt makes Egypt more vulnerable to external shocks. Committing to a credible consolidation strategy is key to restore public finance health, which would improve investor confidence and thereby reduce debt servicing costs. While expanding cash transfers to the most vulnerable, broad-based energy subsidies should be phased out, which would also reduce emissions. As public investment has expanded substantially, further efforts to rationalise large-scale construction projects should be pursued, while allocating resources to green investment. To revive private sector growth, the regulatory burden and the state footprint ought to be reduced, and ongoing reforms including the divestment plan should be implemented fully and effectively. As the working-age population will expand with a rising education level, younger generations need to be better integrated into the labour market. This requires reducing labour taxation, enhancing public employment support and better aligning skills to labour market needs. SPECIAL FEATURES: IMPROVING THE BUSINESS CLIMATE TO REVIVE PRIVATE SECTOR GROWTH; PROMOTING BETTER-QUALITY JOB CREATION FOR INCLUSIVE GROWTH

In many countries, public expenditure, including transfers, plays a major role in reducing income inequality. The report reviews the various ways that budgeting can be used to this end. A first includes taking a broad approach to results-based budgeting, taking social and distributional goals into consideration. A second relies on integrating distributional impact analysis directly into the budget process. The report discusses the concrete experience of eight OECD countries in this area, analysing how they are integrating distributional impact assessment in spending and budgeting decisions. Finally, it discusses the tools, frameworks and data that are needed to take distributional considerations into account as part of evidence-informed policy making.

As climate change increases exposure to natural disasters, countries need new solutions to mitigate risks of natural hazards. For many in Asia and the Pacific, mobilising existing resources is not enough: they need to consider a grand design of disaster risk financing strategies. Catastrophe bonds (CAT bonds) can be an effective, market-based financing tool for the region. While the global CAT bond market has grown steadily since the 1990s, it remains weakly developed in Asia and the Pacific. Its successful development there requires robust purpose-built legal frameworks; developed general bond markets, especially in local currency; appropriate capacity building; and data-driven pricing models. This report explores each of these conditions along with policy suggestions for fostering them, and discusses the development of multi-country CAT bonds in Asia and the Pacific.

This report presents developments of the work of the Inclusive Forum on Carbon Mitigation Approaches (IFCMA) to the G20 Finance Ministers and Central Bank Governors, and reflect on the IFCMA’s achievements one year on from its launch in February 2023.

Despite the ambitious carbon reduction targets set by policy makers worldwide, current investments fall well short of the net-zero emissions scenario. This paper analyses the factors holding back corporate green investment, with a particular focus on the role of firm capacity – specifically financing constraints and weak green management practices – and its interaction with environmental policy. Combining a variety of econometric techniques, including panel data models, difference-in-differences settings and instrumental variable approaches, our cross-country analysis on large listed companies shows that: i) both financing constraints and a lack of green managerial capacity reduce firms’ probability of investing in green technologies, leading to higher emission intensity; ii) well-designed environmental policies can mitigate these impacts. A case study using more granular data on Portuguese firms further shows that: iii) green investment is more elastic to financing conditions than other types of investment; iv) investment in integrated technologies is more sensitive to financing conditions and to managerial capacity compared to end-of-pipe solutions. Lastly, the paper discusses a wide range of policy options that may be considered to foster the green transition through upgrading firms’ capacity.

The OECD and the United Nations Statistics Division (UNSD) have developed jointly the new Multinational Enterprise Information Platform (MEIP). MEIP is built on past OECD and UN efforts to compile statistics on the scale and scope of the international activities of Multinational Enterprises (MNEs). The new platform uses publicly available data to gather information on the world’s 500 largest MNEs in a timely manner, facilitating a comprehensive view of their physical and digital presence. It also includes a monitoring tool for large events such as Mergers and Acquisitions (M&A). The platform also provides a valuable benchmark for National Statistical Offices (NSOs) and researchers, allowing them to compare the national presence of an individual MNE to the global presence. Information on MNEs and their global network can also be visualised in a user-friendly dashboard.

Infrastructure investment has been low in Brazil over the last decades, leaving significant gaps in all infrastructure sectors. To close these gaps, public investment will need to increase and become more effective, while additional private resources need to be mobilised. Improving strategic planning and effectively translating it into budget allocations over time would increase the quality of infrastructure projects. Promoting foreign participation in public procurement would raise competition and value for public money, while strengthening the governance of SOEs would enhance the quality of infrastructure services. Minimising policy and judicial risks would help to leverage more private infrastructure financing, including at longer maturities, while ensuring an adequate risk sharing between public and private actors.