# **A. Prioritizing quality and efficiency of spending**

The WBG is a strong advocate of quality and efficiency of spending related to the SDGs. Specifically, this has entailed advising countries to spend on the right sectors, and to use the right spending metrics—rather than to simply spend more (Fay et al. 2019). These aspects have guided the WBG’s work with its client countries on developing plans to finance investment gaps and the SDGs, including through regular Public Expenditure Reviews and the country engagement component of the _Human Capital Project_ , which identifies policy priorities to achieve the education and health-related SDGs (i.e., SDG 3 and SDG 4). The WBG has also engaged in data collection related to spending efficiency, such as the ThinkHazard and CityScan platforms.

Several sectoral examples illustrate how important public spending choices are for development outcomes. For example, access to education is not the same as improved learning outcomes, and education systems in many developing economies do not deliver the learning that builds human capital (SDG4; World Bank 2011b, 2018e). Regarding climate change, the WBG has shown that cost-effective investments are available to advance SDG 13: each dollar invested in early warning systems has been estimated to avoid more than $4 in losses (Hallegatte 2012).<sup>18</sup> The WBG has underscored that better public spending in agriculture in Sub-Saharan Africa is crucial for improving agricultural productivity (Goyal and Nash 2017).

# **B. Creating a supportive policy environment**

The WBG recognizes that policy reforms, including legal and regulatory reforms, are essential for achieving the SDGs, and works with client countries to implement reforms.<sup>19</sup> As a key part of forming its country programs, the WBG conducts Systemic Country Diagnostics (SCDs) to identify the development challenges and opportunities, including policy challenges. The countrylevel engagements that follow SCDs, including Development Policy Operations and the Programfor-Results financing, are the chief means by which the WBG supports the 2030 Agenda for Sustainable Development (Development Committee 2015a). A WBG Climate Change Action Plan 2016-2020 has also been developed (World Bank 2016a). At the global level, the WBG is monitoring progress on the creation of an enabling policy environment for achieving the SDGS, such as on sustainable energy (SDG 7) through Regulatory Indicators for Sustainable Energy

> 18 However, the quality or access to hydrometeorological services in developing countries has worsened over the past two decades (Rogers and Tsirkunov 2013). As a result, developing countries are less able to detect, anticipate, and adapt to climate change.

> 19 Two illustrative examples highlight the importance of policy reforms in advancing toward the SDGs. The first relates to Sub-Saharan Africa, where access to reliable electricity is both a critical obstacle to achieving development goals in Sub-Saharan Africa and itself an SDG target (7.1). To be sustainable, reforms in this area need to achieve both access to affordable electricity for the poor and profitability for power utilities. Such reforms include minimizing losses in transmission and distribution, ensuring customers pay their electricity bills, and raising electricity tariffs appropriately (Kojima and Trimble 2016). A second example relates to South Asia, where power distortions caused by institutional, regulatory, and social distortions are estimated to cost an aggregate 4-7 percent of GDP per year (Zhang 2018). In particular, power shortages experienced in India’s Northern Region would have dropped by 46 percent without any new investment, if the state-government owned power plants had the same level of managerial performance as privately-owned ones. Small-grid solutions and renewable energy might expand access to electricity (World Bank 2018g). A reliable source of funding is needed for operation and maintenance (Rozenberg and Fay 2019).

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