III Social Safety Nets
Author:
Mrs. Ritha S. Khemani
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Mr. Sanjeev Gupta
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Mr. Calvin A McDonald
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Mr. Louis Dicks-Mireaux
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Marijn Verhoeven https://isni.org/isni/0000000404811396 International Monetary Fund

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Abstract

In countries where the authorities could foresee that reform measures would have a sizable adverse social impact, the policy mix and sequencing have aimed to take this impact into account within a sustainable macroeconomic framework. For instance, IMF-supported programs have aimed to phase out subsidies for food and other items gradually, rather than at once (e.g., Indonesia, 1998; and Senegal, 1994-95). The adverse impact, however, cannot be totally eliminated even with an appropriate policy mix and sequencing. For instance, a change in relative prices that hurts the poor–such as a devaluation that could adversely effect the urban poor through increasing prices of imported products–may be at the heart of a reform program. A tension may emerge, therefore, between stabilization and social protection objectives.

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