Domestic resource mobilisation, debt and the private sector

Increasingly, development financing must come from mobilising each country’s own resources and the private sector. The World Bank plays an important role in building capacity and supporting reforms that both enhance domestic resource mobilisation and facilitate private investments.

Domestic resource mobilisation

The Nordic and Baltic countries seek to strengthen the World Bank’s efforts related to progressive taxation, capacity development and the battle against corruption and illicit financial flows. This is in keeping with the outcome document of the UN’s Fourth International Conference on Financing for Development in 2025, which calls for a doubling of support for measures to expand domestic resource mobilisation. Through IDA, Norway has urged the World Bank to mobilise more technical assistance to countries that collect less than 15 % of their GDP in taxes, and has also advocated the creation of national action plans to combat illicit financial flows.

Boosting revenue from natural resources through improved tax administration and policy is a priority area in which the World Bank could benefit from Norwegian expertise. The World Bank plays a unique role in promoting domestic resource mobilisation by linking capacity development and finance to the broader reform agenda. The World Bank should be more active in promoting integrated solutions for both the revenue and management aspects of public finance. Norwegian support for the World Bank’s efforts to enhance domestic resource mobilisation is channelled primarily through IDA and the Global Tax Programme. Moving forward, Norway will work to integrate these efforts more closely with public financial management and governance, and to strengthen the World Bank’s role as secretariat for the Platform for Collaboration on Tax (PCT).22

Debt

The World Bank works systematically to promote debt transparency while fostering responsible and sustainable debt management. The World Bank cannot itself forgive debt, as this would weaken its credit rating and increase the cost of borrowing. But ongoing debt relief is provided to borrower countries through the Heavily Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI), which are both administered by IDA. This scheme will last until 2044. With the exception of China, there is a lack of support among donor countries for new IDA debt relief mechanisms. IDA rewards countries that adopt responsible debt policies with additional funding, and Norway has advocated even stronger incentives, in part to increase transparency. The World Bank requires all its borrowing countries to provide regular debt reports. Developing countries are increasingly asking for capacity building for debt reporting, management and planning. This should be a part of capacity building for domestic resource mobilisation and financial management. Norway will actively press for the World Bank to prioritise this in cooperation with the IMF.

The outcome document from the 2025 Conference on Financing for Development states that the UN, the World Bank and the IMF are to cooperate on creating a consolidated set of principles for responsible sovereign borrowing and lending. This has been a key Norwegian priority for many years. Norway will work to ensure that the three organisations carry out this task in an integrated and coordinated manner.

Mobilising private capital

Mobilisation of private capital is high on the agenda of the World Bank, which emphasizes efforts to ensure regulatory certainty, mitigate foreign exchange risk, expand the use of originate-to-distribute models, increase the use of guarantees, and deploy more equity. IFC’s 2030 strategy includes ambitious goals for mobilising private capital and increasing equity investment. Norway supports these efforts. There is a risk, however, that elevated mobilisation goals will shift investment towards markets where access to capital is already good, while investments should both add value and maximise development impact. To ensure IFC’s potential as an engine for private sector development in developing countries, Norway will urge IFC to increase its investments in IDA countries, with an emphasis on providing additionality. This will require risk tolerance and investment incentives that extend to smaller actors. IDA’s Private Sector Window is a vital tool for mitigating investment risk in the most challenging markets – and is supported by Norway. IFC’s Social and Environmental Performance Standards constitute the most important framework for evaluating social and environmental risks and are now undergoing an update. Norway will work actively to strengthen these standards.

The World Bank plans to triple its guarantee business by 2030. Norway is a contributor to MIGA’s trust funds for Ukraine and Palestine and for investments in renewable energy. There is a potential for cooperation with the World Bank in connection with Norway’s Sovereign Guarantee Scheme for Renewable Energy. Norway will also continue to support innovative World Bank solutions that encourage large-scale mobilisation of institutional investors.23 Recirculation of capital through secure mechanisms is an important goal.

Job creation

Job creation with a focus on the private sector is the World Bank President’s central priority in the years to 2030. The job creation agenda is one that unites the bank’s shareholders. Jobs for youth are essential for economic growth, stability and social inclusion – especially in Africa. Job creation in formalised sectors provides a foundation for stable, predictable tax revenues. Sustainable employment requires investment in infrastructure and skills, predictable business frameworks and profitable companies. Support provided to small and medium-sized enterprises (SMEs) can boost job creation, entrepreneurship and economic growth. Norway supports the World Bank’s focus on job creation, with its emphasis on fair restructuring, the green transition, decent work, inclusion and gender equality. Norway will continue to promote cooperation between the World Bank and the regional development banks, which also have identified job creation as a high priority.

Cooperation with Norwegian private sector actors

The World Bank is an important partner for private Norwegian actors, which often finance projects in developing countries using guarantees and loans from the World Bank, IFC and MIGA. The Norwegian Investment Fund for Developing Countries (Norfund) and IFC cooperate closely as investment partners on a range of projects.

Feedback provided by private Norwegian actors indicates that the World Bank is instrumental in securing large-scale investments in developing countries and that the bank’s guarantee and loan products – especially when coupled with its policy dialogue with governments – mitigate the risk of operating in challenging markets. However, companies also state that the processes required for obtaining World Bank loans and guarantees are cumbersome and time-consuming, and they urge the World Bank itself to assume more risk in order to mitigate the risk for private actors. The Ministry of Foreign Affairs will continue to serve as a dialogue partner for Norwegian companies on practical dealings with the World Bank and will communicate their views to World Bank management. Meeting places have been successfully organised to enable Norwegian companies to interact with the World Bank leadership during visits to Norway. Topics have included opportunities for cooperation in Ukraine. This work will continue in close cooperation with relevant agencies responsible for business promotion.

The potential exists for Norwegian companies to participate more extensively in competitive bidding for World Bank-financed investment projects, a market that few Norwegian companies are familiar with. The World Bank’s procurement regulations were recently changed, in part to increase the use of quality-rated selection criteria. The World Bank is working actively to secure wider international participation in competitive bidding processes. Norwegian companies express interest in such participation but indicate that few of them tend to succeed in bidding processes at country level. The Foreign Ministry and other relevant agencies will continue disseminating information about competitive bidding opportunities and organising meeting places where Norwegian companies and World Bank officials can discuss such opportunities. Cooperation with Norwegian embassies will be sought to monitor the effect of changes in the World Bank’s procurement rules at country level, including through dialogue with Norwegian companies.

The Government will :

• Strengthen domestic resource mobilisation as a key priority for the World Bank’s reform efforts, lending and capacity building, and help to strengthen these efforts.
• Support the World Bank’s essential role in promoting debt transparency, responsible and sustainable debt management and multilateral debt relief mechanisms that function as intended.
• Promote cooperation between the UN, the World Bank and the IMF on creating a globally consolidated set of principles for responsible sovereign borrowing and responsible lending.
• Call for reforms to strengthen private sector development, especially in the most challenging markets, through the IFC 2030 strategy.
• Support the World Bank’s focus on job creation, with emphasis on fair and green transition, decent work, inclusion and gender equality.
• Strengthen the bank’s efforts to mobilise private capital through guarantee cooperation and encourage the bank to attract institutional capital by increasing the use of originate to-distribute models.
• Urge the World Bank to intensify job-creation efforts for women and youth, including by investing in small and medium-sized enterprises in close cooperation with the regional development banks.
• Facilitate meeting places and dialogue between Norwegian companies and the World Bank on opportunities for cooperation to promote private investment in developing countries, including through World Bank-financed procurement.