Established in July 2001, the Independent Evaluation Office (IEO) provides objective and independent evaluation on issues related to the IMF. The IEO operates independently of IMF management and at arm’s length from the IMF’s Executive Board. Its goals are to enhance the learning culture within the IMF, strengthen the IMF’s external credibility, promote greater understanding of the work of the IMF throughout the membership, and support the Executive Board’s institutional governance and oversight responsibilities. For further information on the IEO and its work program, please see its website (www.ieo-imf.org) or contact the IEO at +1.202.623.7312 or at ieo@imf.org.
IEO
Independent Evaluation Office of the International Monetary Fund
THE IMF AND SOCIAL PROTECTION
2017 EVALUATION REPORT
©2017 International Monetary Fund
CATALOGING-IN-PUBLICATION DATA
JOINT BANK-FUND LIBRARY
Names: Tan, Ling Hui. | International Monetary Fund. | International Monetary Fund. Independent Evaluation Office.
Title: The IMF and social protection / this report was prepared by an IEO team led by Ling Hui Tan.
Other titles: International Monetary Fund and social protection
Description: Washington, DC : International Monetary Fund, 2017. | Includes bibliographical references.
Identifiers: ISBN 9781484313800 (paper)
Subjects: LCSH: International relief–Evaluation. | Public welfare—Evaluation. Classification: LCC HV71.I535 2017
Publication orders may be placed online, by fax, or through the mail:
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International Monetary Fund, Publication Services
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P.O. Box 92780, Washington, DC 20090, U.S.A.
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Tel: (202)623–7430 | Fax: (202)623–7201
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E-mail: publications@imf.org
Contents
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FOREWORD
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CONTRIBUTORS
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ABBREVIATIONS
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EXECUTIVE SUMMARY
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I. INTRODUCTION
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A. Evaluation Framework
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B. Outline of Report
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II. THE IMF’S ROLE IN AND APPROACH TO SOCIAL PROTECTION
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A. The IMF’s Role in Social Protection
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B. The IMF’s Approach to Social Protection
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III. IMF OPERATIONAL INVOLVEMENT IN SOCIAL PROTECTION
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A. Bilateral Surveillance
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B. Programs
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C. Technical Assistance
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IV. INTER-INSTITUTIONAL COLLABORATION ON SOCIAL PROTECTION
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A. The World Bank
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B. Other Institutions
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V. CONCLUSIONS AND RECOMMENDATIONS
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A. Conclusions
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B. Recommendations
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FIGURES
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1. Criteria for Coverage of Structural Issues in Surveillance
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2. Staff Perceptions of IMF Guidance on Social Protection
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3. Staff Perceptions of the IMF’s Role in Social Protection
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4. Incidence of Social Protection Advice in Article IV Consultations
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5. Types of Social Protection Advice in Article IV Summings Up
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6. Food and/or Fuel Subsidy Reform Advice in Article IV Consultations
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7. Selected Issues Papers Discussing Social Protection Issues
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8. IMF Arrangements, by Year Approved
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9. IMF Arrangements with Conditionality Aimed at Strengthening Social Protection
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10. IMF Arrangements with Conditionality on Pension Reform and Energy Subsidy Reform
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11. IMF TA Reports Addressing Social Protection
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12. Staff Survey Results on Extent of Interaction with Other Institutions
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ANNEXES
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1. Definitions of Social Protection and Related Concepts/Terms
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2. Social Protection Advice in Article IV Consultations
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REFERENCES
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STATEMENT BY THE MANAGING DIRECTOR
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THE ACTING CHAIR’S SUMMING UP
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BACKGROUND WORK
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The following Background Documents and Background Papers are available on the IEO website at www.ieo-imf.org.
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BACKGROUND DOCUMENTS
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BD/17–01/01. The IMF’s Role in Social Protection: Fund Policy and Guidance
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BD/17–01/02. External Perspectives of the IMF and Social Protection
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BD/17–01/03. The IMF and Social Protection: IEO Survey of IMF Staff
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BD/17–01/04. The IMF and Social Protection: Seven Advanced Economy Country Cases
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BD/17–01/05. The IMF and Social Protection: Seven Emerging Market Country Cases
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BD/17–01/06. The IMF and Social Protection: Seven Low-Income Country Cases BD/17–01/07. IMF Collaboration with Partner Institutions on Social Protection
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BACKGROUND PAPERS
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BP/17–01/01. The IMF’s Involvement with Pension Issues: 2006–15
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BP/17–01/02. Subsidy Reforms and Implications for Social Protection: An Analysis of IMF Advice on Food and Fuel Subsidies
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The following conventions are used in this publication:
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▶ An en dash (–) between years or months (for example, 2016–17 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2016/17) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2017).
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▶ “Billion” means a thousand million; “trillion” means a thousand billion.
Some of the documents cited and referenced in this report were not available to the public at the time of publication of this report. Under the current policy on public access to the IMF’s archives, some of these documents will become available three or five years after their issuance. They may be referenced as EBS/YY/NN and SM/YY/NN, where EBS and SM indicate the series and YY indicates the year of issue. Certain other types of documents may become available 20 years after their issuance. For further information, see www.imf.org/external/np/arc/eng/archive.htm.
Foreword
Over the past decade the IMF has stepped up its attention to social protection, as it has dealt with the aftermath of the global financial crisis, the impact of commodity price shocks, and other economic stresses on low-income groups and the most vulnerable. This is an area outside the traditional core of the Fund’s expertise and where it has had to work closely with development partners.
The evaluation found that the IMF’s policy advice has often been an effective advocate for social protection, while IMF-supported programs have almost always paid attention to the need to mitigate potential adverse effects on the most vulnerable. At the same time, there has been wide variation in the extent of IMF involvement in social protection across countries and time—with high-quality work in some cases, but more limited treatment in others. To a degree, this variation has reflected an appropriate response to country-specific factors, including whether attention to social protection was critical for macroeconomic stability and the work already being done by others. But idiosyncratic factors also seem to have played a part, as staff have different understandings on what kind of work they are expected to do, as well as different levels of interest and expertise in this area. In surveillance, attention to social protection sometimes devolved into a box-ticking exercise. In the program context, the implementation record was mixed and authorities sometimes found staff to be insufficiently attuned to local conditions and implementation constraints.
The IMF has generally worked well with the World Bank, but collaboration with UN agencies espousing the rights-based approach to social protection has been more challenging. In part because of heightened expectations, IMF external communications efforts have not fully convinced stakeholders, especially civil society, of the Fund’s concern for social protection.
The report’s overarching message is that the IMF should establish a clear strategic framework to guide its involvement in social protection among multiple competing priorities at a time when budgetary resources are tight. Clarity on the scope, objectives, and boundaries of Fund involvement in social protection is essential for the setting of appropriate expectations—internally and externally—as to what the IMF will be responsible for. Given limits on the Fund’s capacity and expertise, it will be particularly important to ensure productive relations with development partners, including institutions with different mandates and policy priorities.
I am pleased that the IMF’s Executive Board has supported the report’s findings and endorsed all our recommendations, and I look forward to management and staff carrying this work program forward. This work is a good demonstration of the Fund’s capacity to continually evolve to take on relevant new challenges consistent with its broad mandate, and I believe that by learning from its experience the Fund can further strengthen its contribution to alleviate individual stress and uncertainty and help to support global prosperity and stability.
Director, Independent Evaluation Office
Contributors
This report was prepared by an IEO team led by Ling Hui Tan (Advisor, IEO).
The other members of the team were:
Alisa Abrams (Senior Research Officer, IEO)
Andrew Feltenstein (Professor of Economics, Andrew Young School of Policy Studies, Georgia State University, and former Senior Advisor, IMF)
Peter Heller (Visiting Professor of Economics, Williams College, and former Deputy Director, IMF)
Jeni Klugman (Fellow, Women and Public Policy Program, Harvard University Kennedy School of Government, and Managing Director, Georgetown Institute for Women, Peace and Security, Georgetown University)
Chris Monasterski (Senior Research Officer, IEO)
Marcelo Selowsky (former Assistant Director, IEO, and former Chief Economist (Europe and Central Asia; Latin America and Caribbean), World Bank)
Nancy Wagner (Advisor, IEO)
Joshua Wojnilower (Research Assistant, IEO)
Jianping Zhou (Senior Economist, IEO).
The evaluation benefited from discussions with participants at three workshops that took place in Washington, D.C., as well comments by IMF staff. However, the final judgments are the responsibility of the IEO alone. Arun Bhatnagar, Annette Canizares, and Amy Gamulo provided administrative assistance and Rachel Weaving, Roxana Pedraglio, and Esha Ray provided editorial and production management assistance.
The report was approved by Charles Collyns.
Abbreviations
| ADB |
Asian Development Bank |
| AFR |
African Department (IMF) |
| APD |
Asia and Pacific Department (IMF) |
| COM |
Communications Department (IMF) |
| CSO |
civil society organization |
| EC |
European Commission |
| ECF |
Extended Credit Facility |
| EFF |
Extended Fund Facility |
| EME |
emerging market economy |
| EU |
European Union |
| EUR |
European Department (IMF) |
| FAD |
Fiscal Affairs Department (IMF) |
| G-20 |
Group of Twenty |
| GDP |
gross domestic product |
| GFSM |
Government Finance Statistics Manual |
| GRA |
General Resources Account |
| IDB |
Inter-American Development Bank |
| ILO |
International Labour Organization |
| IFI |
international financial institution |
| LIC |
low-income country |
| MCD |
Middle East and Central Asia Department (IMF) |
| MDG |
Millennium Development Goal |
| MONA |
Monitoring of Fund Arrangements |
| OECD |
Organisation for Economic Co-operation and Development |
| PRGF |
Poverty Reduction and Growth Facility |
| PRGT |
Poverty Reduction and Growth Trust |
| PRS |
Poverty Reduction Strategy |
| PRSP |
Poverty Reduction Strategy Paper |
| PSI |
Policy Support Instrument |
| PSIA |
poverty and social impact analysis |
| SBA |
Stand-By Arrangement |
| SCF |
Standby Credit Facility |
| SDG |
Sustainable Development Goal |
| SIP |
Selected Issues Paper |
| SPR |
Strategy, Policy, and Review Department (IMF) |
| SPIAC-B |
Social Protection Interagency Cooperation Board |
| TA |
technical assistance |
| UN |
United Nations |
| UNICEF |
United Nations Children’s Fund |
| WHD |
Western Hemisphere Department (IMF) |
Executive Summary
Over the past decade, the IMF has stepped up its attention to social protection as it has dealt with the aftermath of the global financial crisis and addressed concerns from the impact of food and fuel price shocks and broader stresses on low-income groups and the most vulnerable. Thus, the IMF has moved beyond its traditional “fiscal-centric” approach to recognize that social protection can also be “macro-critical” for broader reasons including social and political stability concerns.
Evaluating the IMF’s involvement in social protection is complicated by the fact that there is no standard definition of social protection or of broader/overlapping terms such as “social spending” and “social safeguards” in (or outside) the Fund. In this evaluation, social protection is understood to include policies that provide benefits to vulnerable individuals or households. Food and fuel subsidies are also covered to reflect that such policies have social protection elements, but the evaluation does not cover broader policies for long-term poverty reduction such as health and education spending.
This evaluation found widespread IMF involvement in social protection across countries although the extent of engagement varied. In some cases, engagement was relatively deep, spanning different activities (bilateral surveillance, technical assistance, and/or programs) and involving detailed analysis of distributional impacts, discussion of policy options, active advocacy of social protection, and integration of social protection measures in program design and/or conditionality. In others, it was more limited, emphasizing the relevance of protecting vulnerable groups and increasing fiscal resources for related expenditures, but with little detailed analysis or follow-up.
This cross-country variation to some degree reflected an appropriate response to country-specific factors, in particular an assessment of whether social protection policy was “macro-critical,” and the availability of expertise from development partners or in the country itself. However, idiosyncratic factors also seem to have played a part, particularly in the context of surveillance, as staff had different views on what kind of work they were expected to do in this area and on the IMF’s role in social protection, as well as varying degrees of interest in these issues. In some cases, staff provided high-quality analysis, but at times it seemed that attention to social protection in surveillance devolved into a box-ticking exercise as staff tried to pay due attention to an increasingly broad range of policy issues. Country officials noted that often advice was generic and lacked appreciation of country circumstances.
In the program context, the IMF almost always took account of social protection concerns, albeit with mixed success in implementation. It invariably emphasized the need to mitigate potential adverse effects of program measures on the most vulnerable and generally worked well with development partners to address social protection concerns. However, authorities sometimes found the IMF to be insufficiently attuned to local conditions, and the IMF’s efforts to incorporate social protection concerns in program design and conditionality in some cases met with implementation challenges due to local capacity constraints and differences in country commitment.
IMF–World Bank cooperation on social protection generally worked well, allowing the Fund to draw effectively on Bank expertise in this area. However, while the IMF’s preferred approach of targeting social protection to the poor and vulnerable was aligned with the World Bank’s approach, it meshed less well with the rights-based approach to social protection espoused by the International Labour Organization and UN agencies which emphasizes universal benefits and targeting by category (e.g., demographic group) rather than income. This difference in viewpoints posed a challenge to IMF collaboration with such agencies and it may complicate Bank-Fund collaboration going forward as the World Bank moves to adopt the goal of universal social protection.
This difference also affected how civil society organizations perceived the IMF’s commitment to social protection and the UN Sustainable Development Goals. Efforts by the IMF’s external communications to emphasize the Fund’s “human face” did not always convince stakeholders, especially civil society, despite the IMF’s genuine increased attention to social protection, in part because of heightened expectations.
Looking forward, concerns about inequality, social and political stability, the impact of trade, immigration, and new technologies on vulnerable groups, as well as the consequences of aging populations seem likely to keep social protection issues high on the global policy agenda. This evaluation concludes with a number of recommendations to further enhance the IMF’s effectiveness in this area.
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▶ First, it will be important to establish a clear strategic framework setting the scope, objectives, and boundaries of the IMF’s involvement in social protection in the face of multiple competing claims on limited staff resources. The Fund does not have the capacity or expertise to be deeply involved in social protection in all members, and such a framework would allow for a more consistent approach to deciding on the priority to be given to social protection country by country, and help to set appropriate expectations—internally and externally—as to what the IMF will and will not be accountable for.
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▶ Second, for countries where social protection is judged to be a macro-critical strategic priority, the IMF should provide tailored advice based on in-depth analysis of the particular country situation. The advice would draw on work by development partners or country authorities where available, but in its absence, the necessary analysis may need to be undertaken in-house.
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▶ Third, the IMF needs to find more realistic and effective approaches to program design and conditionality to ensure that adverse impacts of program measures on the most vulnerable are mitigated. This effort could build on the analysis and recommendations in the recent Board paper on social safeguards in low-income country programs but should be extended to cover Fund-supported programs across the membership.
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▶ Fourth, in external communications the IMF should realistically explain its approach to social protection issues and what it can and cannot do in this area given its mandate and limited resources and expertise. This would help to temper the expectations of stakeholders and avoid reputational risk to the Fund.
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▶ Fifth, the IMF should engage actively in inter-institutional cooperation on social protection to find ways to work constructively with development partners, particularly institutions with different mandates and policy priorities.