In F&D Magazine

Reclaiming a Policy Role for Economists | Acknowledging missteps, listening well, defending data, and avoiding jargon will help the profession engage | Karen Dynan

https://www.imf.org/en/Publications/fandd/issues/2025/06/point-of-view-reclaiming-a-policy-role-for-economists-karen-dynan


Can be linked to Economics and politics – Do the politicians speak to the economists? in Revenue Board

When there is 20 + minutes taxiing from landing to arrival gate and a short time to the connecting flight which is at the other end of the airport, the airport is very good for keeping fitness levels up!  Easy airport to navigate notwithstanding that!

Interesting article in The Lancet  Volume 405, Issue 10493p1893-1895 May 31, 2025

Navigating health financing cliffs: a new era in global health

Kumanan Rasanathana rasanathank@who.int ∙ Maylene M Beltranc ∙ Alberta A Biritwum-Nyarkod ∙ Mark S Blechere ∙ Mark Dybulf ∙ Hajime Inoueg ∙ et al.

Complete article and references in

https://www.thelancet.com/action/showPdf?pii=S0140-6736%2825%2900720-2
https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(25)00720-2/fulltext?dgcid=raven_jbs_etoc_email

An era in global health, inaugurated in 2000 by the UN Millennium Declaration,1 has passed. This era saw large increases in domestic spending on health and official development assistance for health,2 the creation of new global health institutions, such as the Global Fund and Gavi, and impressive progress in child mortality and infectious disease epidemic control.3 The sudden passing of this era, triggered in early 2025 by rapid reductions in development assistance for health (by US, European, and other large external funders), has exacerbated existing pressures on domestic health spending (which decreased between 2021 and 2022 per capita across all countries for the first time since 20002) and led to dramatic health financing cliffs.

Domestic health financing constraints—increasing debt servicing costs, poor economic growth following the COVID-19 pandemic, and deprioritisation of health spending with increased military expenditure—reduce the ability of countries to adapt to sudden changes in external funding, especially in low-income countries (LICs) where government health spending has stagnated since 2000.2 With sharp increases in debt servicing expenditures, over 3 billion people now live in countries where governments spend more on debt payments than health or education.4 Domestic spending is of paramount importance for health coverage, as development assistance for health makes up less than 0·5% of total health spending globally.2 However, external support has played a crucial role for specific programmes, populations, and services, particularly in LICs and in humanitarian crises. Development assistance for health has already been sharply declining, following the large increases during the COVID-19 pandemic, and even earlier,5 from US$84 billion in 2021 to $65 billion in 2023.6 The prognosis is now grim: the USA alone accounted for almost a third of external health funding in 2023.6
The question is whether countries, already off-track on the universal health coverage targets of the Sustainable Development Goals,7 can navigate these health financing cliffs to sustain health services. The potential for reversal in hard-won progress and large-scale suffering and death is a severe crisis.8 To fill these sudden gaps, countries can aim to increase current domestic and external resources, establish and mobilise new funding sources, increase efficiencies, reallocate funds, emphasise equity in service delivery, and adopt innovations. The task is two-fold: to address the acute crisis, and to transform health systems for this new era of global health. Both tasks have implications for how external funders and partners provide support.

Urgent action is needed on transitional financing, including prioritising increased domestic financing supported by concessional lending and blending grants with loans (in countries that can support increased borrowing). South Africa has proposed a further $1·5 billion in the national health budget over the next xrs, partly through tax increases.9 Nigeria has allocated an additional $200 million for health in the government budget.10
Countries can also target specific health priorities to fill gaps. In Thailand, external funding for health was less than 0·4% in 2022,2 but still supported programmes for HIV/AIDS and refugees in border camps in early 2025. The Government of Thailand is mitigating the acute consequences of funding withdrawal and, long-term, is seeking to reintegrate these services into the national public health system.11 Countries also need to address financing cliffs in sectors beyond health, such as education and nutrition, which drive key social determinants.

LICs have fewer choices to combat widespread service disruptions, job losses, and undermining of supply chains and health information systems, compared with high-income and middle-income countries. In Uganda, the Government is mandating integration of HIV/AIDS, tuberculosis, hepatitis B, hypertension, and diabetes services into routine services and streamlining health systems functions to increase efficiencies. External partners, including development banks, can help by revisiting debt-to-health swaps (where creditors forgive national debt in exchange for increased domestic investment in health12), putting remaining external assistance funds on-budget, and continuing to engage in technical support and knowledge sharing after financial support ceases.13

Countries can implement legal reforms to facilitate rapid purchasing of drugs within regular public procurement systems, including regional mechanisms, such as the Pan American Health Organization Revolving Fund.14 Countries can also identify and support policy champions to advocate for increased domestic investments in services previously funded by external sources.13 Innovations in financing (eg, taxation and insurance schemes) and technology (eg, digitalisation and artificial intelligence) are not a panacea, but can assist in mobilising resources and improving efficiency and equity, if stewarded systematically by governments.
Countries can learn from each other for both immediate and long-term challenges. Global partners, such as WHO, can help to document how countries are responding to the short-term crisis and identify medium-term imperatives for transformation of health systems and optimal use of continuing external funding, including identifying scenarios and policy options to raise domestic resources and realise efficiency gains. Key areas for data and evidence to guide decision making include tracking financial flows, informing costing of programmes, establishing criteria for priority-setting, and identifying duplication and other inefficiencies from parallel programmes that can arise from external support.

Low data transparency and insufficient information on which funds flow to which services compound the difficulty of mobilising domestic resources to respond to changes in external funding. There is a need to improve monitoring and related accountability of financing for countries and external funders alike.15 In the medium term, the current fragmented data systems and information flows need reform to enable the system-wide allocation of domestic and external resources to meet population health needs most efficiently. South Africa provides an example of how financial data can be linked to implementation indicators to improve financial accountability.16

The new era of global health must be rapidly constructed without seeking merely to restore what was. The previous era was already likely to end in 2030—despite the current unprecedented reductions, development assistance for health was already declining in the lead up to 2030 and the passing of the Sustainable Development Goals. Calls for greater national and regional leadership and ownership were already strong, as seen in the Lusaka Agenda.17 Overhauling the global health financing architecture requires grappling with the power asymmetries and misaligned incentive structures that have led to the current financial cliffs. Countries have progressed the universal health coverage agenda in previous times of fiscal constraint and there is the potential for greater South–South support. To minimise suffering and death in this crisis, countries have no choice but to exert more leadership and responsibility. Global health and development finance institutions must address their own challenges, adapting their financing and operating models, to robustly support countries to do so.

Interesting article/blog

How AI Can Help Both Tax Collectors and Taxpayers
By Thomas Cantens and Herve Tourpe

"New technologies have the potential to improve the relationship between governments and citizens. Tax portals, customs IT systems and online services have simplified interactions with public authorities, reduced bureaucratic hurdles, and increased transparency. Now, generative artificial intelligence (GenAI) is emerging as the next transformative force. Known for its ability to understand and produce human language, GenAI opens possibilities that go beyond simple automation. However, in an area as politically sensitive as taxation, it also raises important questions that could quickly undermine trust.

Tax authorities are beginning to explore GenAI, though most efforts are still at an early, experimental stage. The most evident area so far has been on improving communication with taxpayers.

In Singapore, a virtual assistant answers tax questions in multiple languages and has cut call-center inquiries by half. Korea has deployed an AI guide to help citizens file and pay taxes. In France, AI can analyze incoming emails and propose draft responses for civil servants to validate. While these applications are promising, a more profound question emerges: Can GenAI significantly alter the relationship between governments and citizens? Furthermore, how will it influence the way citizens experience and perceive taxation—a politically sensitive process that is governed by law yet deeply intertwined with social norms and practices?

What’s new with GenAI?

Most AI systems currently used by tax and customs authorities are predictive and built for a single function. They analyze large sets of structured data—like past tax declarations or transactions—to produce things like risk scores to indicate possible fraud. By contrast, GenAI is a generalist system that understands almost all forms of information and is designed to interact with humans in any language. It can handle a range of tasks, from drafting letters to providing interactive guidance about tax regulations and assisting officers in their investigations.

By training a GenAI agent with legal texts, tax codes, operating procedures, and internal guidelines, administrations can adapt it to specific needs. The result is a dynamic system capable of understanding and producing content that both civil servants and taxpayers can interact with.

Transforming the State-Society Relationship

While AI tools already in use often enhance efficiency, they have not fundamentally changed the way revenue authorities work or engage with citizens. They mostly replaced manual tasks or systems for econometric or statistical modelling.

With GenAI, there are more profound implications. Internally, it can help tax and customs officials to focus on analytical and judgment-based roles, allowing them to become oversight specialists and increasing their productivity. Externally, it can reduce the knowledge gap between administrations and taxpayers, aiding in the interpretation of complex provisions, navigating laws, identifying deductions, and even auto-filling forms.

For low-income countries, GenAI offers the opportunity to drive organizational reforms and leapfrog into the most modern systems. For example, in Madagascar, the customs authority wants to use GenAI to improve risk management, combat fraud and increase revenue, using data accumulated over 10 years to train its system.

The human-like interactions offered by AI chat tools can personalize the process, as shown in Singapore and Korea, where users can ask questions and receive plain language replies. Citizens’ organizations, academics, and political parties can also use GenAI to examine proposed reforms, compare scenarios, and engage in deeper policy debates. This two-way transformation could increase overall trust, making taxation feel less like a frustrating obligation and more like a shared responsibility of both taxpayers and governments.

Preconditions for success

Despite its potential, GenAI also comes with challenges. Issues related to data quality, ethics, privacy concerns and hallucinations (i.e., incorrect results) must be addressed to reinforce and not erode trust. For instance, Korea’s approach—directing particularly sensitive queries to human agents—reflects the need for careful oversight of confidential matters. Results must be explainable and perceived as fair in all cases.

Effective knowledge management is another requirement. Revenue authorities have extensive laws, regulations, case records, and operational manuals. However, scattered archives and incomplete digitization can hamper efforts to train AI systems effectively. A human must determine which documents are accurate, relevant, and suitable for inclusion in the training material.

As GenAI becomes integrated into various aspects of revenue administration, employees will need to be trained to interpret, correct, and complement its outputs. Policymakers must ensure that errors are reported and addressed promptly.

By providing human-like capabilities to support taxpayers and tax authorities, GenAI can act as both taxman and taxpayer assistant, automating routine tasks, clarifying complex issues, and fostering a more transparent and collaborative relationship. This technology can lower administrative hurdles, demystify tax obligations, and invite broader participation in policy debates. However, shaping it properly requires strong leadership, ethical policy frameworks, and vigilant oversight of data quality, privacy, and accuracy."

https://content.govdelivery.com/accounts/USIMF/bulletins/3d40efb

Tracking public expenditure to assess impact on different aspects of life has been made much more of a possibility with the advances in IT and associated software.  When I carried out research initially on the regional impact of defence expenditure way back in the early 1970s and then on public expenditure and taxation on the regions in the UK this required delving into the basis data to see if there was any classification and, if not, building it up from the available information.  Nowadays such classification is built into the system in many countries given the experience from Subnational PEFAs.  Although SN PEFAs only cover expenditures and revenues within the subnational jurisdiction, data on central government expenditure within geographical areas is provided in many countries (for example Georgia, Ukraine and Moldova).  The expansion of PEFA to also focus on Climate and Gender incorporates tracking in CRPFM-2 Tracking climate-related expenditure and GRPFM-6 Tracking budget expenditure for gender equality though such tracking is much more a work-in-progress.

A recent paper “Counting what matters how to classify, account and track spending for prevention” by Andrew O’Brien and Anita Charlesworth https://demos.co.uk/wp-content/uploads/2024/12/Counting-what-matters_2024_Dec_V4.pdf.  The paper by Demos and the Health Foundation argues for Preventative Departmental Expenditure Limits (PDELs).  The reports structure is:
Context page 4
Overview page 5
The prevention measurement challenge: public spending classifications page 6
The prevention measurement challenge: types of prevention activity page 10
Preventative expenditure and health page 13
Preventative expenditure and homelessness page 18
Preventative expenditure and children’s social care page 23
Building a system to implement PDEL page 27
PDEL and parliamentary accountability page 31
Conclusion page 35

One of the challenges addressed in the paper are the definitional complexities.  One of the points made is that the classification of expenditure must be presentable in a way that can advance a significant important policy goal to justify the effort of measuring and tracking this form of expenditure.  It uses the case of capital expenditure as an example.  The broad argument is that Spending Reviews should be policy related and take a wider rather than narrower classification related to impact. 

Given the use of software and IT, how widespread could this approach be developed?  The Demos and Health Foundation paper makes sense given that prevention is better than cure as the saying goes. Any other cross cutting areas that would benefit from such an approach?  Over to the PFM Boarders for a New Year’s debate.......?