Municipal Finance and Planning: 2020 Urban Learning Brief for Mission Staff
The world is increasingly turning to cities for solutions to pressing development challenges, like poverty, unemployment, access to basic services, and even climate change.
The world is increasingly turning to cities for solutions
to pressing development challenges, like poverty, unemployment, access to basic
services, and even climate change. These expectations effectively increase
cities’ responsibilities. But this increase in responsibility is often not
accompanied by the financial resources to meet them, even in countries that
have implemented decentralization reforms. While cities naturally rely on
fiscal transfers from the national government, which can be unreliable due to
global economic trends as well as domestic political economy issues.
Consequently, cities around the world struggle to
invest in critical infrastructure and deliver services to accommodate their
Municipal governments and other subnational entities must
improve their revenue generation and financial management in orderto
address urban challenges of the 21st century. Without adequate
resources, cities risk becoming centers of poverty,
inequality, and environmental degradation—as opposed to centers of economic opportunity
and social change.
There is an emerging opportunity to tap into cities’
potential to leverage capital to finance infrastructure projects and basicservices. Improvements in municipal finance capacity encompasses
taxation, application of innovative finance tools,
improving municipal debt capacity and leverage of private investment, among