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Benchmarking Infrastructure Development 2020

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A new World Bank report evaluates how well developing-country governments fare in setting the regulatory stage to prepare, procure, and manage large infrastructure projects. It finds that—while many countries have made progress towards better regulatory quality that helps ensure infrastructure projects deliver good services at a reasonable cost—practices still lag behind in many countries. By providing actionable indicators and a country-by-country assessment, the report supports evidence-based reforms to improve enabling environments for quality infrastructure projects.

Building on previous reports in the series, Benchmarking Infrastructure Development 2020 assesses public-private partnership (PPP) regulatory frameworks in 140 economies, expanding coverage to include a pilot assessment of 40 economies’ use of traditional public investment for infrastructure development.

Appropriate, effective regulatory frameworks and institutional capacity are crucial for ensuring that investments in infrastructure are carried out strategically and efficiently. A supportive regulatory framework also reduces the costs and risks of carrying out individual projects, which provides the private sector with a more predictable and safe environment to invest. This is particularly important as all hands on deck—public and private—are needed to fill the acute infrastructure financing gap faced by most developing countries and as countries will seek to rebuild better after the COVID-19 pandemic.

Yet, despite the need to mobilize all kinds of finance to meet people’s needs for basic infrastructure services, the report notes that most developing countries still rely primarily on traditional procurement methods and are not sufficiently adopting more innovative ones, such as competitive dialogue, that could better fit the features of a PPP. The World Bank emphasizes that, while traditional public investment plays an important, dominant role in infrastructure investment, governments around the world should consider PPPs when suitable to bring increased resources and expertise to bear in ensuring broad access to infrastructure services.

As the COVID-19 pandemic affects the delivery and use of infrastructure worldwide, Imad Fakhoury, Global Director for Infrastructure Finance, PPPs & Guarantees at the World Bank, makes an important link to the report: “The key finding is unsurprising: there’s more room for regulatory improvement in both PPPs and traditional public investments. While many countries have recently reformed their regulatory framework, we still need significantly more progress.” Fakhoury adds, “With governments facing severely reduced fiscal space, this point is timelyas the experience of past crises shows that many will use infrastructure spending as an economic stimulus measure in COVID-19’s wake. This investmentin addition to bringing economic growthmust be more transparent and target key areas of sustainability in terms of social benefits and inclusion, including gender, job creation, as well as climate and environment. The global pandemic shines a spotlight on the need for a new generation of investments that gets countries closer to achieving their development goals efficiently, without wasting resources.”

Indeed, many regulatory aspects directly affect the ability of governments to respond to crises like pandemics, including the adoption of international good practices with respect to modifications and renegotiations of contracts to avoid opportunistic behaviors, regulation of specific circumstances like force majeure clauses, dispute resolution mechanisms, addressing grounds and consequences of contract termination, and the use of modern monitoring systems for tracking progress and addressing concerns. Moreover, properly regulating other aspects of the infrastructure project cycle—such as planning, prioritization and budgeting; adequate social and environmental impact assessments; and appropriate value-for-money evaluations of procurement modality options—will also support the good use of resources to foster sustainable infrastructure during any recovery phase.

Some of the report’s most interesting findings include:

  • Less than 25% of countries assessed require a procurement strategy; only 4% require market sounding.
  • International good practices for project preparation seem to be followed even when not regulated.
  • Low-income economies see the largest gap between legal and practice scores in the procurement phase, indicating they face major challenges in implementing regulatory requirements.
  • A total of 14 international good practices in contract management are adopted by more than half of economies surveyed; still disclosure of performance information is rare.

Further details, methodological information, and the complete dataset is available online at the project’s website: http://bpp.worldbank.org.

The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. It is supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. The WBG is making available up to $160 billion over a 15-month period ending June 2021 to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and $12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.

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Lithuania: COVID-19 crisis reinforces the need for reforms to drive growth and reduce inequality

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Effective containment measures, a well-functioning health system and swift public support to firms and households have helped Lithuania to weather the COVID-19 crisis to date. That said, the pandemic still carries significant economic risks, and the recent upsurge in infections is very concerning. Once a recovery is under way, Lithuania should aim to reform public companies, strengthen public finances, and ensure that growth benefits all people and regions, according to a new OECD report. 

The OECD’s latest Economic Survey of Lithuania says that prior to COVID-19, good economic management and an investment-friendly business climate were helping to lift average Lithuanian incomes closer to advanced country levels. While the recession provoked by the virus has been milder than elsewhere – with GDP projected to drop by 2% in 2020 before rebounding by 2.7% in 2021 – Lithuania’s small and open economy will be vulnerable to any prolonged disruption to world trade. Increasing public investment and improving governance at state-owned enterprises could help lift growth and productivity. Other reforms should focus on improving the effectiveness of spending and taxation. Over the longer term, Lithuania should establish a clear debt reduction path and a long-term debt target.

“Lithuania’s sound economic management of recent years, and its swift response to both the health and economic aspects of the pandemic, are helping the country to weather the COVID-19 crisis,” said OECD Secretary-General Angel Gurría. “It is now key to build on these achievements and restart the reform engine to ensure robust, sustainable and inclusive growth for the future.”

The pandemic has exposed high levels of income inequality in Lithuania, where relative poverty is high among the unemployed, the less educated, single parents and older people due to a tax-benefit system that is insufficiently redistributive. The Survey recommends Lithuania to continue providing temporary support to people and businesses hit by COVID-19, as well as to increase regular social support while retaining incentives to work.

In terms of support to the economy, the Survey notes that while Lithuania’s government spending has increased considerably over the past two years, it remains below the OECD average. Public investment also remains low. Given the importance of modernising infrastructure and stimulating crisis-hit demand, the Survey recommends maintaining or increasing current levels of investment and improving investment quality by carrying out rigorous cost-benefit analysis for individual projects. Increasing investment in rural areas, and giving local government more say in tax policy and spending, could help reduce regional disparities and promote inclusive growth.

The Survey also recommends phasing out environmentally damaging fossil fuel subsidies and increasing environmental taxation, which would benefit public finances while helping the shift to a lower-carbon economy.

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United States confirms its leading role in the fight against transnational corruption

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The United States continues to demonstrate an increasing level of anti-bribery enforcement, having convicted or sanctioned 174 companies and 115 individuals for foreign bribery and related offences under the Foreign Corrupt Practices Act (FCPA) between September 2010 and July 2019. The United States is thus commended for a significant upward trend in enforcement and confirming the prominent role it plays globally in combating foreign bribery.

The 44-country OECD Working Group on Bribery has just completed its Phase 4 evaluation of the United States’ implementation of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related instruments.

Given developments since the United States’ last evaluation in 2010, the Working Group made a range of recommendations to the United States, including to:

  • Consider ways to enhance protections for whistleblowers who report potential FCPA anti-bribery violations by non-issuers and provide further guidance on available whistleblower protections;
  • Continue to further evaluate and refine policies and guidance concerning the FCPA;
  • Make publicly available the extension and completion of NPAs and DPAs with legal persons in foreign bribery matters as well as the grounds for extending DPAs in FCPA matters;
  • Continue to evaluate the effectiveness of the Corporate Enforcement Policy in particular in terms of encouraging self-disclosure and of its deterrent effect on foreign bribery; and
  • Continue to address recidivism through appropriate sanctions and raise awareness of its impact on the choice of resolution in FCPA matters.

The report praises the United States for its sustained commitment to enforcing its foreign bribery offence as well as its key role in promoting the implementation of the Convention. This achievement results from a combination of enhanced expertise and resources to investigate and prosecute foreign bribery, the enforcement of a broad range of offences in foreign bribery cases, the effective use of non-trial resolution mechanisms, and the development of published policies to incentivise companies’ co-operation with law enforcement agencies.

The report also notes a large number of positive developments and good practices, such as the DOJ’s reliance on several theories of liability to hold both companies and individuals responsible for foreign bribery, and the United States’ successful co-ordination that has allowed multi-agency resolutions against alleged offenders in FCPA matters. In parallel, the United States has increasingly sought to co-ordinate and co-operate in investigating and resolving multijurisdictional foreign bribery matters with other jurisdictions. Finally, the United States has helped foreign partners build their capacity to fight foreign bribery through joint conferences and peer-to-peer training thus enabling the law enforcement authorities of these countries to better investigate and sanction prominent foreign bribery cases.

The United States’ Phase 4 report was adopted by the OECD Working Group on Bribery on 16 October 2020. The report lists the recommendations the Working Group made to the United States on pages 111-113, and includes an overview of recent enforcement activity and specific legal, policy, and institutional features of the United States’ framework for fighting foreign bribery. In accordance with the standard procedure, the United States will submit a written report to the Working Group within two years (October 2022) on its implementation of all recommendations and its enforcement efforts. This report will also be made publicly available.

The report is part of the OECD Working Group on Bribery’s fourth phase of monitoring, launched in 2016. Phase 4 looks at the evaluated country’s particular challenges and positive achievements. It also explores issues such as detection, enforcement, corporate liability, and international co-operation, as well as covering unresolved issues from prior reports.

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Skills and lifelong learning critical for all workers

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The International Labour Organization has published a new guide for trade unions on skills development and lifelong learning.

The guide “Skills Development and Lifelong Learning: Resource Guide for Workers’Organizations” , published by the ILO’s Skills and Employability Branch and Bureau for Workers’ Activities (ACTRAV) addresses key challenges facing workers’ organizations, including best practices, key priorities and main challenges. It also outlines why trade unions should be involved in skills development and lifelong learning.

According to the guide, building the capacity and engagement of workers’organizations in skills development and lifelong learning, based on a human-centred approach and International Labour Standards, will help build a ‘better normal’ in the post-COVID-19 World.

“What matters in the end, is that ALL workers can acquire the skills of their choice to get jobs and to keep jobs, and to be equipped to face the transitions they will be confronted with over the working life. Skills development and lifelong learning are essential to enhance workers’ capabilities to participate fully in decent work, to contribute to human development, active citizenship and the strengthening of democracy,” said Maria Helena André, Director of the ILO’s Bureau for Workers’ Activities.

The guide is designed for workers’ organizations, trainers, facilitators and ILO officials. It is part of a comprehensive programme of support for workers’organizations in preparation for the 2021 International Labour Conference (ILC), which will discuss skills and lifelong learning. It also paves the way for the general discussion on standing setting for apprenticeships, which takes place at the ILC in 2022 and 2023.

“If the lifelong leaning notion has to become a reality, the link between the world of education and the world of work needs to be very strong, bringing these together, through a process of social dialogue where governments, employers, and workers organization jointly formulate policies and programmes,” said Srinivas Reddy, Director of the ILO SKILLS Branch.

A Global webinar  bringing together workers’ organizations, technical experts, academics and senior ILO officials was held on the November 18th 2020 to launch the guide.

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