Three trends in the global financial market are converging to make sukuk, the Islamic financial instrument most similar to a conventional bond, a potentially viable form of finance for green investments: (1) banks are reluctant to finance infrastructure due to stricter capital requirements; (2) an increasing number of investors are interested in ‘environmentally sustainable investing’ (in other words, investing to promote activities seen as positive for the environment); and (3) the market for sukuk is growing significantly. While these three trends are distinct and not obviously related, taken together, they create a market opportunity for sukuk to be used as a tool to finance environmentally sustainable infrastructure projects.
The need for significant infrastructure spending is obvious in both developed and developing countries. From crumbling transportation infrastructure in the United States to inadequate power generation capacity in India, the evidence is clear that improving infrastructure is a global priority. At the same time, popular concern about climate change and the detrimental impact of increasing greenhouse gas emissions has also made improving infrastructure in an environmentally sustainable manner a priority.
All eyes turned to Russia recently, when on 16 December the ruble plunged by more than 11 percent, despite the Central Bank of Russia’s last-minute interest rate hike of 6.5 percentage points to 17 percent. When it looked like Russia’s turmoil might spread to global markets, western economies sat up and paid close attention.
What may have gone unnoticed, however, is the ongoing impact on our client countries in the Europe and Central Asia region.
On becoming an EU member, how much will the budget calendar and its preparation need to change? How best to plan and execute projects which are pre-financed? How to record unspent EU funds in the next fiscal year? To what extent should the Ministry of Finance be involved in the process before the signing of financial agreements with the EU? These and other questions arise in relation to the impact on a country’s fiscal position, co-financing obligations, pre-financings and bridging resources, and payment of errors.
Small and medium sized companies are the backbone of Latin America’s economy. They represent more than 90 percent of all enterprises in the region, generating over half of all jobs and a quarter of the region’s gross domestic product. They are essential to economic growth, yet their success is often blocked by one key obstacle: lack of credit. Nearly a third of companies in the region identified lack of credit as a major constraint, according to recent surveys.
Take the case of Sonia Arias, who owns a small textile business in Medellin, Colombia. When she opened her business seven years ago, she took an informal loan that left her with sky-high interest rates and little cash to reinvest. “When I was paying these loans,” she said, “it felt like we were being hit with a stick.”
Would you be more willing to pay taxes if you didn’t have to spend hours doing it, or if you see that money being used in the right way? Well, you are not alone.
Armenians, like people around the world, feel the same. According to the recently conducted Tax Perception Survey in the country, easier tax compliance and more visible link between taxes paid and public services received was found to be particularly important.
Between 66 percent and 75 percent of respondents said they would be more willing to pay more taxes if the procedures were easy and less time-consuming, if they saw more useful social and other public services, or if they saw less corruption.
Over 95 percent of respondents felt the tax burden is heavy or very heavy, while almost 50 percent reported that evading tax payments was not justified under any circumstances.
About 57 percent noted that high taxes or desperate financial situations were the main reasons for avoiding or evading tax payments.
The data unveiled by the latest Tax Perception Survey, carried out with USAID support and World Bank Group technical assistance covered around 1,500 households and 400 business taxpayers. The analysis strengthened the need to modernize the tax system, which has remained a major challenge for Armenia. Despite Armenia’s ranking as 37th in Doing Business, the taxation system, at 103rd on the list, still requires a lot of work.
To be sure, there have been some improvements to the system in the past few years. They include the introduction of electronic filing of tax returns, e-government applications, risk-based audit principles, and taxpayer service centers and appeal system. These achievements contributed to increasing the tax to GDP ratio from 19.5 percent in 2010 to 22.8 percent in 2013.
But much remains to be done to further streamline and simplify tax procedures, modernize the tax administration, and enact a tax code.
Laura Tuck, Vice President for the World Bank's Europe and Central Asia region, discusses her trip to Poland, its economy, progress in boosting shared prosperity, and the World Bank's partnership with the country.
We know that numbers are useful. We rely on them to analyze global economic trends, but also to count calories, create passwords, manage schedules and track our spending. Numbers give order to the chaos of our lives. And that means we can use numbers to reflect, learn, and re-discover ourselves.
We’ve launched a new YouTube series called ‘My Favorite Number,’ that shows how a single digit can give us unique insight into global development and humanity. A number can have a profound effect on human lives.