Money Management Changes After This Covid-19 Pandamic

Money Management: Domestic revenues and external flows for achieving the Sustainable Development Goals (SDGs) were insufficient even before COVID-19. A lack of public finances coupled with high public debt levels may prevent low- and middle-income countries from effectively responding to the COVID-19 pandemic. Developing economies are likely to be hit by rising debt and equity outflows, as well as a decline in remittances as a result of the unfolding health and economic crises. Would a collapse of development finance worsen poverty for millions of people and prevent us from achieving the Sustainable Development Goals, our blueprint for a more robust, fairer world?

Life has only one constant: change.

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Money management Transformation initiatives are expected to deliver more by leaders. Competitiveness and worker resiliency are their top priorities. The number of organizations undergoing digital transformation is also increasing. Significantly, this increased focus on change does not seem to be accompanied by opportunities for customers and partners.

It integrates results from multiple proprietary surveys conducted from April to August 2020 of executives across industries who collectively manage USD 3.7 trillion in revenue. As a result of COVID-19, the business environment for money management has fundamentally changed.

The pace and flexibility demands of business leaders have been amplified dramatically regardless of the circumstances. An unprecedented rate of change, unrelenting disruptions, and rapidly changing customer expectations are eroding old barriers. Customers’ perspectives are becoming more apparent. Motivation has become existential rather than aspirational.

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Success depends on the human element.

CEOs expect to expand nearly all their tech competencies as part of their upcoming digital transformations, but human resources make the change successful.

Using IBV data, our analysis reveals that workforce training and customer experience money management are the most significant factors influencing an organization’s growth.

Despite this, executives have failed to recognize these factors. A majority of executives expect a shift in customer behavior after COVID-19, with more people shopping and interacting with customer service online rather than in person. Over the next two years, customer experience money management will be a high priority for 84 percent of executives, compared with 35 percent just two years ago. “Improved customer service” is only ranked midway down the list of benefits executives seek out of digital transformation.

Finances domestically before COVID-19

Many developing countries experienced an insufficient tax revenue source before the COVID-19 crisis, especially compared to the Sustainable Development Goals. A third (46 of 124 countries eligible for ODA) published data on tax revenue for 2017. For effective state functioning and economic growth in money management, this is widely accepted as a benchmark. Almost two-thirds of these countries (79) were less than 20% of GDP.

According to data from recent years, average growth in tax revenues has declined. OECD, 2019) found that tax-to-GDP ratios remained unchanged in 26 African countries between 2015 and 2017. Because of the Global Financial Crisis, tax revenue in low- and middle-income countries decreased. After that point, average revenue collection as a share of national income has not fully recovered. From a medium-term perspective, average growth remains bumpy and relatively stagnant.

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On the other hand, low-income countries have seen their tax revenues increase more consistently over 2002-17, but the growth has moderated since 2012. Latin America and the Caribbean’s tax revenues were slowly declining during 2017 and 2018. COVID-19 had already worsened the revenue outlook (OECD et al., 2020) even before the crisis.

A variety of other domestic resources are also available to support sustainable development. As noted in the OECD Global Outlook on Financing for Sustainable Development (OECD, forthcoming), domestic savings for money management have increased in developing economies as a share of GDP from 2016 to 2018. Still, they have remained much smaller in lower-income countries than in middle-income countries.

Developing economies are primarily driven by domestic private investment, but data is only available for about one-third. Even though domestic financial institutions and markets are limited in low- and lower-middle-income countries, and borrowing costs can be high, the domestic financial sector facilitates savings and borrowing.

Money Management Finances external to COVID-19

As in the pre-COVID-19 period, low- and middle-income countries received net inflows of external financing at a low level. As a result of depreciating renminbi and slower growth in emerging economies, external finance decreased to USD 2 trillion from USD 2 trillion in 2013. This was due to rising stock market volatility caused by the devaluation of the renminbi. Direct foreign investment (FDI), portfolio investments, and other investments decreased, causing lending to the banking sector to fall. Remittances and official development finance remain stable in the same timeframe.

Debt levels before COVID-19

As COVID-19 approached, several countries had run out of financial room to increase resources. In low-income developing economies, the median public debt is 46.5% of GDP, up from 38.7% in 2010-2014. It has since stagnated (IMF, 2019). By comparison, debt service accounted for an average of 12.2% of government revenue in 2018 (Griffiths, 2019).

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Historically, African countries rank highest in money management in their debt-to-GDP ratio since they have benefited from programs like the Heavily-Indebted Poor Country (HIPC) Initiative, through which they received substantial debt relief (Calderon and Zeugack, 2020). According to UNCTAD (2019), more than double the amount of external debt held by developing economies and emerging economies has grown since 2008, from USD 3.5 trillion to USD 8.8 trillion, or from 22% to 29% of GDP. The latest analysis shows that 33 countries out of 69 analyzed were classified as debt distress or at “high risk” as of late 2019.