Social Science > Poverty and Homelessness
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Togo has made progress towards achieving the Sustainable Development Goals (SDGs). Nevertheless, a substantial share of the population continues to live in poverty, and the distance to reaching the SDGs remains large. Further, the government has made progress on building a social protection system, but coverage and spending volumes remain low in comparison to peers. To accelerate progress towards the SDGs, the country would benefit from (i) raising spending on health and education in the context of a sustainable fiscal policy to help the quickly growing ranks of the young build the human capital they need to succeed in the modern workplace; and (ii) expand cash transfers to the poor. Such transfers have an excellent track record globally in helping lower poverty and they likely also help accelerate growth and make it more sustainable, including by assisting the poor absorb shocks.
One of the few things politicians agree on is that we need more economic growth. Almost every country sputtered into the 21st century: Japan and Germany in the mid-1990s, the United States and United Kingdom in the mid-2000s, China from the mid-2010s. After two decades of successive crises, most economies are sluggish shadows of former selves, and leaders have thrust growth to the top of their priorities.
At the request of the Ministry of Finance, a mission from the International Monetary Fund visited San Jose. The purpose of the mission was to assess the proposal to a universal basic pension and to estimate its fiscal and welfare impact on the budget, on pension schemes, and on old age income poverty. Costa Rica is entering a demographic transition which will see the old age dependency ratios significantly worsen in the coming 20 years. The long-term financial sustainability of the general social security pension scheme (IVM) is a concern, despite various reforms introduced over the past three decades and the scheme’s reserves are expected to be exhausted by the mid-2030s. The government’s proposal intends to address financial sustainability, the adequacy of coverage and of benefit levels, as well as distributional equity through the introduction of a universal basic pension. The IMF team’s assessment is that the proposal is unlikely to fully meet its stated objectives. The proposal will worsen social security pension scheme’s financial sustainability and create additional financing needs. This will translate into an accelerated exhaustion of IVM reserves and, after the reserves are depleted, require significant adjustments to IVM parameters or higher government transfers. Old age income security may be more effectively addressed, with less pronounced fiscal side-effects, through improving coverage and compliance in IVM and expanding the reach of the social pension scheme. The primary instruments of achieving these goals are: (a) amending the rules undermining compliance with registration and wage reporting regulations in the contributory schemes, (b) improving coordination between tax and contribution collection agencies, (c) amending the regulations governing eligibility for noncontributory social pensions and (d) ensuring the noncontributory social pension is adequately financed.
MACROECONOMIC DEVELOPMENTS AND PROSPECTS FOR LOW-INCOME COUNTRIES—2024—ONLINE ANNEXES