Middle income countries have made considerable progress over the past decades. And, with sound policies and strong reform efforts, they will meet the challenges of the future. Further efforts are also needed to ensure that the benefits of high growth are widely shared.
In this context, for 2019 and so on the IMF emphasizes the following five reform priorities.
1) Fiscal policies. Countries, of course, have different needs, social preferences, and fiscal room to maneuver. With that caveat, options include more progressive fiscal policies and a well-designed tax-benefit system that reduce distortions. Tax measures can support low-income household saving, for example, in the form of education and retirement accounts.
2) Targeted structural measures. Possible measures include action to ensure equal access to quality education and health services or to remove gender barriers, for example in the labor market. Investment in human capital focused on the disadvantaged groups will help to lift productivity while also ensuring that the resulting higher income is more widely shared.
3) Economic and financial inclusion. Enhancing financial inclusion, which means greater access to financial services to more people in more areas. It will require legal and regulatory frameworks that facilitate information sharing, protect consumers, and provide risk-based supervision.
4) Building economic and financial resilience. This is especially needed for countries that are particularly vulnerable to natural disasters and climate change, including many small middle-income countries. Priorities include, making effective use of insurance instruments and financial resources, investing in well-designed public infrastructure, and disaster planning.
5) Preparing for the “future of work.” This means adapting social insurance systems and safety nets to account for what the jobs of the future may look like, especially with advances in technology.