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The CEQ and The World Bank - Interview with Gabriela Inchauste

Gabriela Inchauste is Lead Economist in the Poverty and Equity Gobal Practice at the World Bank and co-editor with Nora Lustig of the forthcoming edited volume The Distributional Impact of Fiscal Policy: Experience from Developing Countries to be published by the World Bank.

1. In which countries has your area and the Institute collaborated?  Of those, which CEQ analyses have been used in the policy dialogue with the government? Are there any cases in which CEQ results were particularly useful in guiding the policy dialogue and/or policy recommendations?

The collaboration between the CEQ Institute and my area at the World Bank started in 2013 with six countries: Armenia, Ethiopia, Indonesia, Jordan, South Africa, and Sri Lanka. Previously, the CEQ and the WB had worked on Mexico. Since 2013, the list has expanded to include Chile, Colombia, the Dominican Republic, Ghana, Paraguay, and Russia. In addition, the WB has applied the CEQ methodology in Comoros, Croatia, Greece, Latvia, Mali, Montenegro, Mozambique, Namibia, Poland, Senegal, Turkey, Vietnam, and Zambia. In all cases, the CEQ-based analyses have been used in the policy dialogue with the government. The original CEQ work led to policy simulations work and updates in several countries, and has been especially useful in Armenia, Georgia, and Indonesia, which have since undertaken reform efforts. Local government staff have been trained in Indonesia, Paraguay, and South Africa. Although we cannot yet say that the CEQ framework has been mainstreamed yet into the budget process, several countries have requested updates, including Armenia, Chile, Colombia, and Indonesia.

2. In which countries is the Bank carrying out full-fledged or partial CEQ Assessments? In your view, why is there so much interest in doing CEQ analyses?

Beyond the places mentioned earlier, the Bank is currently undertaking full-fledged or partial CEQ Assessments in 14 additional countries this year: Brazil, Belarus, Croatia, Latvia, Mali, Montenegro, Mozambique, Namibia, Poland, Senegal, Serbia, Turkey, Vietnam, and Zambia. Interest in CEQ analysis comes from the fact that this approach allows for an overall assessment as well as highly granular policy recommendations on the redistributive and poverty-reducing impact of fiscal interventions. Although empirical work on incidence analysis has a long history, comprehensive analysis that could be compared to other countries had been sorely lacking in developing countries.

3. What do you think are the CEQ’s approach greatest strengths?

The approach’s biggest strengths are that it is (i) comprehensive, (ii) comparable and (iii) relies on state-of-the art tax and benefit incidence analysis. The analysis aims to understand the impact of as many tax and spending interventions as the data and current methods allow, including indirect taxes and subsidies which are critical in developing countries but are often left out in developed-country approaches. Moreover, great care is placed in defining income concepts so that results can be made comparable. Finally, the analysis goes beyond standard approaches, and asks what the impact of each fiscal intervention, and the system as a whole, on poverty and inequality.

4. What do you think the CEQ Institute should prioritize in the next five years?

The greatest public good that the CEQ Institute could provide is to allow for public access to the methods and results of the analysis across countries. This includes ensuring that the methodology is easily accessible to anyone wishing to undertake the analysis, providing training, and providing an easy way to obtain comparable results across countries which can help countries benchmark their systems relative to others.