The shockwaves of the war in Ukraine hit many countries while they were still reeling from the COVID-19 pandemic. For many developing countries, the fiscal challenges have mounted ever since—the result of surging food, fertilizer and energy prices, rising interest rates, and slowing growth.
In response to the overlapping crises, nearly all countries increased their overall government and health spending. But only a few of them—mostly high-income countries—will be able to sustain these levels in the years ahead. Improving domestic resource mobilization, especially in a way that can sustainably broaden tax bases, will be crucial.