Europe and Central Asia | Governance

Domestic Resource Mobilization / Tax Administration: Revenue mobilization is a key development priority and essential to finance investments in basic services, such as health care, education, sanitation, public safety and transportation to achieve the World Bank’s twin goals of ending extreme poverty and boosting shared prosperity. We help countries improve their tax policies and administrations’ ability to collect revenues and equip their revenue administrations with knowledge and tools to raise revenues and fight tax evasion through early detection, smarter auditing, and effective investigation and prosecution. The Bank focuses its attention on countries whose tax revenues are consistently below fifteen percent of GDP. Thirty-six percent of IDA countries and 70 percent of fragile and conflict-affected countries fall below this 15 percent baseline. In response to strong client demand, DRM/tax administration is a growing part of the Governance analytical and lending work.

Effective functioning of SOEs promote development and achievement of the WBG twin goals, especially given their roles in service delivery in key sectors such as energy, water and transport, and fiscal stability.  SOEs are important economic actors across regions and rank among the world’s largest companies. In fact, they have been an important part of the response to the COVID-19 pandemic. SOE financial results affect fiscal performance and government balance sheets. Corporate governance, including corporate financial reporting, is relevant for SOEs and beyond to all public interest entities. The World Bank also provides a range of knowledge, convening and capacity development services in the area of financial reporting and auditing.

Economic institutions determine whether people invest, save, get educated, search for and create new technologies. Political institutions determine the form, function and effectiveness of the economic institutions. Poorly performing public institutions are characterized by weak managerial and technical capacity, low productivity, lack of accountability, poor compliance and corruption. Bank support to public institutions focuses on core functions such as policy, planning and decision making, human resource management, monitoring and evaluation. Increasingly, Bank support for institutional reforms seeks to address the underlying political economy factors that shape incentives, how institutions are created how, they interact and how they function. We do this by looking at issues of power, accountability, oversight and citizen engagement.

In many countries, sub-national governments are responsible for the delivery of a wide range of basic public and administrative services and the design of an effective sharing of responsibilities and ensuing accountabilities between levels of government. Sub-national governance also covers issues such as fiscal, political and administrative decentralization.  While the structure and size of sub-national governments vary, they almost invariably play an important role in service delivery, irrespective of the formal structure of government, and account for a significant share in public spending and investment. The benefits of decentralization of service delivery often are that citizens can become more directly engaged in the political system, with the chance of more effectively holding their governments accountable, as well as the governments being more responsive to the needs of their citizens.

The Governance Practice is entrusted with the Bank’s fiduciary function to ensure that the proceeds of any credit/loan are used only for the purposes for which the credit/loan was granted, and with due regard to economy and efficiency. This supports the development impact of Bank-assisted operations by ensuring that these operations have adequate financial management and procurement arrangements.