Opinion | Developing economies face tough reforms as global aid and credit shrink

grow darker by the day. These challenges demand an increasingly prominent role for the state, not only as a buffer against the economic shocks that disproportionately harm the most vulnerable but also as an architect of resilience.

For developing nations, the storm clouds of deglobalisation and climate change

, healthcare and education to inject dynamism into their economies. But the unresolved question looms: where will the money come from?

Governments in poorer countries must fund vast investments in infrastructure

Regrettably, little progress has been made in boosting the tax-raising capacity of developing nations. Tax revenues, if donor grants are excluded, have remained largely stagnant at around 12-13 per cent of gross domestic product – an alarmingly low figure. For years, budget gaps were plugged by aid from richer nations.

Yet this lifeline is fraying. Official development assistance (ODA) is in steep decline

as fiscal pressures, rising interest rates and growing defence budgets put foreign aid on the chopping block.