Vulnerable groups are country specific, and can include, for example, the poor, elderly, disabled, children, youth, and/or women.
This note thus informs the Fund’s engagement via the Extended Credit Facility (ECF), Standby Credit Facility (SCF), and Rapid Credit Facility (RCF), as well as the non-financial Policy Support Instrument (PSI). This note can also be relevant for LICs that engage with the Fund through the Policy Coordination Instrument (PCI). Also, Staff-Monitored Programs (SMPs) for LICs should be consistent with the members’ poverty reduction and growth objectives, and include safeguards on social and other priority spending (see 2017 Handbook of IMF Facilities for Low-income Countries).
This relates to SDG 1.3, which calls for members to implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable.
The SDGs include 17 Goals and 169 targets aimed at eradicating poverty in all its forms and dimensions, and achieving sustainable development in three dimensions—economic, social and environmental—in a balanced and integrated manner.
These include the World Bank (WB), United Nations agencies, and regional development banks (for example, the African Development Bank and Asian Development Bank), and bilateral donors.
Social Safeguards and Program Design in PRGT and PSI-supported Programs (June 2017).
The IMF and Social Protection (Independent Evaluation Office, July 2017) and IMF Management Implementation Plan (January 2018). Staff is working on establishing a strategic framework to guide the Fund’s engagement in social spending issues, in response to the Implementation Plan. That paper is planned for Board discussion in early 2019. This present guidance note will provide operational guidance to the IMF’s work on LICs until guidelines can be established under the strategic framework. Recent analytical work includes Macro-Structural Policies and Income Inequality in Low-Income Developing Countries (IMF Staff Discussion Notes No. 17/01, January 2017), and the Fiscal Monitor Chapter on Tackling Inequality (2017).
These complement the principles set in the Conditionality Guidelines (September 2002), and Revised Operational Guidance to IMF Staff on the 2002 Conditionality Guidelines (July 2014). The 2018 Review of Conditionality and the Design of the Fund-Supported Programs (ongoing) will also explore the effectiveness of conditionality designed to help achieve more growth-friendly consolidation and protect social spending in all Fund-supported programs.
In cases where a large fiscal adjustment makes it hard to maintain social spending as a share of overall spending, additional donor support should be sought to avert undue hardship.
Staff should identify the size of on- and off-budget spending in program documents and present in a table whenever feasible (Box 1 on documentation requirements).
Best practices set out in Box 2 of Guidance Note for Surveillance Under Article IV Consultations broadly apply here.
For details, see Staff Guidance Note on the Fund’s Engagement with Countries in Fragile Situations (April 2012).
Staff should also consider including spending at the local government level in cases of fiscal decentralization.
Experience suggests that if the spending definition is too broad, it can be difficult for the authorities to meet a target in the event of shocks such as revenue shortfalls; if the definition is too narrow, it may do little to promote social safeguards. Over the past decade, most LICs have put in place policies and programs to provide coverage with essential health services and financial protection from large health expenditures for the poor and vulnerable (see Universal Health Coverage Study Series). These programs are critical for progress toward the SDG target of universal health coverage and ending poverty. Defining spending floors of these programs rather than of the whole health sector can be beneficial.
PMT-based Social Registries. Measuring Income and Poverty Using Proxy Means Tests (Social Protection & Labor team, Dhaka, Bangladesh) provides an introduction to proxy means testing. However, recent research has highlighted the drawbacks of using means tests to target resources to the poorest households in LICs (for example, see A Poor Means Test? Econometric Targeting in Africa by Brown, Ravallion, and van de Walle, 2017).
Programs such as Burkina Faso (2010 and 2013 ECFs), Liberia (2012 ECF), Mozambique (2010 PSI, 2013 PSI, and 2015 SCF), and Senegal (2010 and 2015 PSIs) included spending in the entire health and education sectors.
See, for example, UNICEF’s Engagements in Influencing Domestic Public Finance for Children: A Global Programme Framework; UNICEF, New York 2017.
For example, the World Bank (The State of Social Safety Nets 2015) found that targeted cash transfer programs have positive spillover effects on the local economy, with income multipliers ranging from $1.08 to $2.52 for each dollar transferred.
ITs and performance criteria refer to conditionality under the ECF- and SCF-supported programs. In the case of the PSIs the discussion refers to Assessment Criteria (ACs) and quantitative targets. For the RCF, the discussion refers to informal monitoring targets if these are set by the member to build a track record.
See Guidance Note for Surveillance Under Article IV Consultations (03/20/2015).