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TECHNICAL NOTES AND MANUALS
IMF Engagement on Social Safety Net Issues in Surveillance and Program Work
Prepared by teams from the Fiscal Affairs Department and the Strategy, Policy, and Review Department
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©2022 International Monetary Fund
IMF Engagement on Social Safety Net Issues for Surveillance and Program Work
IMF Technical Notes and Manuals 2022/000
Fiscal Affairs Department and Strategy, Policy, and Review Department
| Prepared by a team led by David Coady (FAD) and Geremia Palomba (SPR), including Fernanda Brollo and Riki Matsumoto (FAD), and Tohid Atashbar, Deeksha Kale, Baoping Shang, and Kiichi Tokuoka (SPR); under the supervision of Ruud de Mooij (FAD) and Guillaume Chabert (SPR); with administrative assistance provided by Liza Prado (FAD). The paper has benefited greatly from excellent comments from IMF staff and external reviewers, including the Global Coalition for Social Protection Floors, the International Labour Organization, the Organisation for Economic Co-operation and Development, the UN Children’s Fund, and World Bank. |
| Prepared by a team led by David Coady (FAD) and Geremia Palomba (SPR), including Fernanda Brollo and Riki Matsumoto (FAD), and Tohid Atashbar, Deeksha Kale, Baoping Shang, and Kiichi Tokuoka (SPR); under the supervision of Ruud de Mooij (FAD) and Guillaume Chabert (SPR); with administrative assistance provided by Liza Prado (FAD). The paper has benefited greatly from excellent comments from IMF staff and external reviewers, including the Global Coalition for Social Protection Floors, the International Labour Organization, the Organisation for Economic Co-operation and Development, the UN Children’s Fund, and World Bank. |
Abstract: The International Monetary Fund’s engagement on social safety net (SSN) issues is likely to expand as member countries respond to growing challenges in the economic and fiscal landscape. SSNs play a crucial role in protecting households from poverty, promoting inclusive growth, and maintaining social stability. This technical note discusses (1) the different channels through which SSN spending may become macro-critical, (2) how to assess the importance of these channels, and (3) the types of policy responses that are appropriate and the tradeoffs involved in choosing among them. To facilitate a more comprehensive assessment of SSN spending, the paper also examines the complementary role of labor market programs (for example, unemployment benefits and active labor market programs). The paper emphasizes the importance of early engagement and coordination with development partners with expertise on social safety nets and with different stakeholders when formulating policy advice.
DISCLAIMER: This Technical Guidance Note should not be reported as representing the views of the IMF. The views expressed in this paper are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
| ISBN: | 979-8-40022-250-4 (Paper) 979-8-40022-254-2 (ePub) 979-8-40022-259-7 (PDF) |
| JEL Classification Numbers: | H53; I38; J13; J18; G28; O23 |
| Keywords: | Fiscal Policy, Social Protection, Social Safety Nets, Spending adequacy, Spending Efficiency, Fiscal Sustainability |
| Authors’ email addresses: | fbrollo@imf.org (corresponding author) dcoady@imf.org gpalomba@imf.org tatashbar@imf.org dkale@imf.org bshang@imf.org ktokuoka@imf.org rdemooij@imf.org gchabert@imf.org lprado@imf.org |
| ISBN: | 979-8-40022-250-4 (Paper) 979-8-40022-254-2 (ePub) 979-8-40022-259-7 (PDF) |
| JEL Classification Numbers: | H53; I38; J13; J18; G28; O23 |
| Keywords: | Fiscal Policy, Social Protection, Social Safety Nets, Spending adequacy, Spending Efficiency, Fiscal Sustainability |
| Authors’ email addresses: | fbrollo@imf.org (corresponding author) dcoady@imf.org gpalomba@imf.org tatashbar@imf.org dkale@imf.org bshang@imf.org ktokuoka@imf.org rdemooij@imf.org gchabert@imf.org lprado@imf.org |
Contents
Executive Summary
Introduction
Social Safety Nets: Objectives and Features
Assessing the Macro-Criticality of Social Safety Net Spending
A. Spending Adequacy
B. Spending Efficiency
C. Fiscal Sustainability
Incorporating Social Safety Net Issues into Country Work
A. General Considerations
B. Surveillance
C. IMF-Supported Programs
D. Dialogue with Country Authorities
E. Internal Resources
References
Boxes
Box 1. Typical Social Safety Net Program Components
Box 2. Labor Market Programs
Box 3. Alternative Approaches to Targeting
Box 4. Estimating the SSN Spending Needed to Eliminate Poverty
Box 5. Country Experiences in Addressing Social Safety Net Issues in Surveillance
Box 6. Country Experiences with Addressing Social Safety Net Issues in IMF-Supported Programs
Box 7. Selected Examples of Communicating Policy Advice to Country Authorities
Figures
Figure 1. Spending on SSN and Passive Labor Market Programs in Selected Advanced Economies
Figure 2. SSN Spending in EMDEs, by Region
Figure 3. Poverty and Social Safety Nets in Emerging and Developing Economies
Figure 4. Estimated Additional Spending Required to Eliminate Poverty in EMDEs, by Region
Figure 5. Estimated Spending Required to Eliminate Relative Poverty in Selected Advanced Economies
Figure 6. Government Spending on Active Labor Market Policies in Selected Advanced Economies
Figure 7. Benefit Incidence of Total and Means-Tested Benefits in European Countries
Figure 8. Benefit Incidence of SSN Transfers in EMDEs, by Region
Figure 9. Benefit-Cost Ratio of Social Safety Net Transfers by Type of Social Safety Net Program
Figure 10. Participation Tax Rates and Marginal Effective Tax Rates in High-Income European Countries
Figure 11. Debt to GDP Ratios for Selected Advanced Economies (2019 and 2020)
Figure 12. Debt to GDP Ratios for Selected Emerging Market Economies (2019 and 2020)
Figure 13. Projected Change in Age-Related Government Spending for Advanced Economies (2021–30)
Figure 14. Projected Change in Age-Related Government Spending for (Select) Emerging Market Economies (2021–30)
Figure 15. Tax Systems in Emerging Markets and Developing Economies
Figure 16. Government Spending Required to Meet the Sustainable Development Goals in Selected Sectors by 2030, by Region
Table
Table 1. Illustrative Questions on SSN Issues in Surveillance and Program Work
Annexes
Annex 1. Internal and External Resources Supporting Analytical Work and Policy Engagement
Annex 2. Social Safety Nets and Household Resilience to Shocks
Annex 3. Social Safety Nets and Economic Growth