IMF's new Strategy for Engagement on Social Spending
review by Barry Herman
Four years have passed since the International Monetary Fund adopted a new Strategy for Engagement on Social Spending that was meant to increase the support that IMF gives to national policies on social protection, health and education. The Fund interprets this as instructing its staff to focus on the adequacy, efficiency and sustainability of social programs when they can affect macroeconomic conditions (are “macro-critical”) in member countries. The staff make their judgments during annual assessments of macroeconomic conditions in individual countries or when devising policy adjustment programs with countries that need to work toward recovery from macroeconomic crises. One way to assess how the new strategy is being implemented is to look for changes in IMF advice and the policy requirements for IMF loans. Results so far have not been encouraging, although it is still early. Another way is to examine the guidance that IMF gives its staff when they go on country missions. This paper takes the latter approach. While the IMF has not issued a formal guidance note to staff as of 2023, it has published two interim guidance papers that give insight into the strengths and weaknesses of IMF thinking on how to implement its strategy. This paper supports some aspects and takes issue with other aspects of the guidance thus far given.
FINANCING UNIVERSAL SOCIAL PROTECTION IN DEVELOPING COUNTRIES
Social protection needs to be a fundamental part of national economic and development policy in all countries in order to realize the economic and social rights of all the world's people. SocDevJustice has joined with other civil society organizations to fight, especially in developing countries, for adequate floors of basic social protection along the life cycle, from infant and child support through social pensions for the elderly. We do this primarily as a founding member of the Global Coalition for Social Protection Floors (GCSPF), a global network of over 100 civil society organizations and trade unions (see details here >> ).
The International Labour Organization (ILO) is the lead United Nations agency assisting countries in building social protection floors. See its work here >>> and a background video illustrating social protection policies in different parts of the developing world here >>>
Work of on social protection on which SocDevJustice engages includes
- providing expertise and advocacy in the development of a new institutional view on prioritising social protection and other forms of social spending by the International Monetary Fund (IMF) in its interactions with developing countries (see our joint statement here >>> )
- participating in "side events" on social protection at the United Nations and at the spring and annual joint meetings of the IMF and the World Bank (see details here >>>)
- assisting the European Union-supported joint programme on improving synergies between social protection and public finance management in four developing countries, Cambodia, Nepal, Senegal and Uganda (see here >>>), and in
- supporting global advocacy campaigns of the Global Coalition for Social Protection Floors (GCSPF).
The current global advocacy campaign focuses on mobilizing international support for creating an international fund to help finance technical assistance and support for social protection programmes in developing countries. The most recent initiative is the letter to the Group of 20 major economy countries.
Civil Society Training Manual on Public Financial Management for Social Protection
SocDevJustice members Gemman Adaba and Barry Herman drafted a Civil Society Training Manual on Public Financial Management for Social Protection.
This manual on PFM is part of the programme Improving Synergies Between Social Protection and Public Finance Management (SP&PFM) which provides medium-term support to multiple countries aiming to strengthen their social protection systems at a national level and ensure sustainable financing. Funded by the European Union (EU), the initiative is implemented jointly by the International Labour Organization (ILO), Unicef, and the Global Coalition for Social Protection Floors (GCSPF), in collaboration with national partners and EU Delegations in each country.
A Global Fund for Social Protection: Advocacy Letter to the G20
The Global Coalition for Social Protection Floors calls on the G20 to launch an initiative to establish a Global Fund for Social Protection.
In 2021, several important decisions will be taken at the international level as the world community strives to find ways out of the COVID 19 crisis. The focus will be on the vaccination efforts that are now beginning in many countries. An essential complement to that is to overcome the devastating social and economic consequences of the pandemic and build resilience going forward. To that end, and in advance of the G20 Employment Working Group meeting on February 15–17, we call on the G20 to launch an initiative to establish a Global Fund for Social Protection.
We write to you on behalf of the Global Coalition for Social Protection Floors, a group of over 100 national and international non-governmental organizations promoting the right of all people to social security.
The crisis has not only created unprecedented demand on national healthcare systems, but it has also decimated jobs and workers’ livelihoods, and it has fuelled greater poverty and inequalities. In order to support those affected, as well as better prevent comparable crisis situations in the future, well-functioning social protection systems are needed. In many parts of the world, however, such systems are not in place. According to the International Labour Organisation, even before the crisis less than one half of the world’s population had access to any form of social protection, and more than two-thirds of the world’s population were unable to count on a comprehensive set of protections set out in international labour standards2. In many cases, it is not the political will that is lacking, but sufficient financial resources, especially in low-income countries. To support those countries lacking fiscal space in setting up appropriate social protection systems, a broad, solidarity-based and well-coordinated initiative by the international community is therefore needed.
This is why Magdalena Sepúlveda, former UN Special Rapporteur on Extreme Poverty and Human Rights, and Olivier de Schutter, current UN Special Rapporteur on Extreme Poverty and Human Rights, have called for the establishment of a Global Fund for Social Protection.3 This call is supported by the government of France4, a number of civil society organisations and trade unions.5 The Global Coalition for Social Protection Floors strongly backs this initiative and has published a global call for the establishment of a Global Fund.6
A Global Fund for Social Protection would provide technical assistance for governments to offer a set of benefits that would guarantee a minimum income security for all over the lifecycle. It would also provide temporary matching funds to low-income countries.
This year’s G20 is a critical opportunity for the world’s largest economies to come together and coordinate a response to overcome the consequences of the pandemic. We therefore urge you to use your political means within the framework of the G20 to advocate for such a Fund. Such an act of international solidarity would unite the world on the path towards an equitable recovery from this pandemic.
A Compact for Assured and Sustainable Financing of Social Protection Floors in Developing Countries
Can we simultaneously create incentives for governments to sustainably finance adequate and fair social protection floors and internationally assure they will have the fiscal resources to meet the need for social protection expenditures during economic or natural crises? A new paper by Barry Herman proposes such a policy initiative that would involve automatic emergency financing and/or debt relief for countries maintaining sustainably financed social protection floors that rely on adequate and appropriate taxation. It builds on existing policies and international policy priorities, involving several modest amendments to existing policies that together would amount to a major policy initiative. The proposal is offered for discussion. See and download the paper here >>>.
The thinking behind the proposal began with a presentation at a conference organized by the London School of Economics and the International Monetary Fund in November 2018. A brief video by the author of the paper is available here: https://www.youtube.com/watch?v=2y7MIZImwh4&feature=youtu.be .
CSO Forum event at the IMF/World Bank Annual Meetings
Washington, D.C., October 11, 2017
The NGO Committee on Financing for Development, Social Justice in Global Development, Brot fuer die Welt, and the Virginia Gildersleeve International Fund jointly organized a session on financing universal social protection in developing countries at the Civil Society Forum of the 2017 Annual Meetings of the International Monetary Fund and the World Bank.
Governments at the United Nations agreed in the May 2017 Financing for Development Forum to discuss aspects of the financing of “social protection systems and measures, including floors” during the next meeting of the Financing for Development Follow-up Forum, which will take place in New York on 23-26 April 2018. This would be the first opportunity for a broad, intergovernmental discussion of policy experiences and needs regarding the financing of social protection and it seemed important to the organizers of this civil society session at the Fund/Bank Annual Meetings to alert the development community to this upcoming event. To this end, the session brought together senior representatives of the International Labor Organization, the International Monetary Fund, the United Nations and the World Bank, together with a representative of the civil society Global Coalition for Social Protection Floors.
Anita Thomas, Chair, NGO Committee on Financing for Development and UN representative of the Virginia Gildersleeve International Fund
Vinicius Carvalho Pinheiro, Special Representative of ILO to the United Nations and Director of the New York Office of ILO
Rachel Moussié, Deputy Director, Social Protection Program, Women in Informal Employment, Globalizing and Organizing (WIEGO) and Global Coalition for Social Protection Floors.
Margaret Ellen Grosh, Senior Advisor in the Social Protection and Jobs Global Practice, World Bank.
Serpil Bouza, Strategy, Policy and Review Department, International Monetary Fund
Shari Spiegel, Chief, Policy Analysis and Development Branch, Financing for Development Office, UN Department of Economic and Social Affairs
Barry Herman, Member of the Board, Social Justice in Global Development and Visiting Scholar, Graduate Program in International Affairs, The New School.
A shared theme of the discussion was that governments should work toward universal provision of at least a basic level of nationally determined social protection of its people, which the international community has deemed the “social protection floor.” As Ms. Moussié of WIEGO observed, the concept of social protection was broader than social “safety nets”, a policy option on which the Bretton Woods institutions have focused. As the name suggests, safety nets are to catch people in the process of falling, as owing to some hazard or difficulty. That is not the only reason for social protection.
Although countries currently differ in the extent and types of social protection they provide, the moderator in his introduction said countries could move toward universal protection by expanding coverage of specific classes of beneficiaries, such as for child and maternal benefits and old age security, including also support of the disabled and the unemployed. These floors of social protection could take the form of cash transfers to beneficiaries at different stages of their life cycle, combined with universal access to essential health services. Indeed, taking the components together, a country having a universal social protection system would realize counter-cyclical economic benefits, as well as respond to the social imperatives for instituting them.
As Mr. Pinheiro of ILO reminded the audience, the international initiative to promote social protection floors began as part of a joint international response to the financial crisis of 2008. As seen almost a decade later, the provision of social protection floors is possible everywhere, even in situations of fiscal constraint. In fact, the number of countries with some social protection programs has more than doubled, from 72 countries in 2000 to 149 in 2017, according to the World Bank’s ASPIRE data base, as cited by Ms. Grosh. The challenge was thus to broaden the coverage in many of those countries, especially the low-income countries where coverage is generally low, and to introduce it in others.
At the same time, the cost of social protection floors must be covered from public revenues in a sustainable way. As Mr. Pinheiro noted, countries use different policy instruments to finance at least part of their social protection floors. Brazil used financial transaction taxes, other countries use tourist taxes, El Salvador makes an effort to limit tax evasion and redirect it to social protection floors, and so on. In fact, in many countries where social protection levels are low, there is space for expanding the coverage of social protection and increasing its level. However, one obstacle to adequate funding of social protection, as emphasized by Ms. Moussié, was tax policies that undermined the ability of States to mobilize sufficient public resources. She said that international financial institutions had promoted lowering corporate tax rates and she criticized policy decisions taken by a number of countries to grant generous corporate tax incentives that narrow the tax base. In addition, she called for further work to adopt macro-economic frameworks that enhance social and economic resilience rather than cut back on social benefits.
Ms. Spiegel of the UN recalled that the issue of financing social protection got high attention at the 2015 International Conference on Financing for Development (FfD) in Addis Ababa. The Addis Ababa Action Agenda emphasizes domestic resource mobilization, especially strengthening tax systems that can sustainably finance social protection. She noted that programs should be sustainably financed out of current revenues over the medium to long term, and it is important that governments use counter-cyclical forms of financing. As the Inter-Agency Task Force (IATF) on FfD highlights in its 2017 report, the world economy is cyclical and potentially volatile and counter-cyclical measures for social protection, like stabilization funds and state contingent debt can be useful. Quick-disbursing official international facilities may also contribute to counter crises. She noted that the IATF will have a follow-up meeting on alternative financing strategies this fall, to serve as inputs to its 2018 report.
Ms. Bouza reported that the IMF is considering how to better assist countries in strengthening their social protection systems in a fiscally sustainable way. Mobilizing domestic revenue and enhancing spending efficiency will help ensure stable financing sources for social protection. She continued, the IMF will leverage the expertise of other institutions on social protection issues and step up its collaboration in this area with country authorities and development partners. The intention is to encourage countries to build capacity for effective social protection systems in normal times so that effective systems are available during times of crisis. For this, close collaboration will be necessary both during surveillance (i.e. Article IV consultations) and during discussions of IMF-supported programs. To this end, the IMF is drafting a staff guidance note for release in 2018 to support such discussions in low income countries. At the same time, the IMF is also working on an implementation plan that will lay out concrete steps to address the recommendations made by the Independent Evaluation Office in its report, The IMF and Social Protection (http://www.ieo-imf.org/ieo/files/completedevaluations/SP%20-%202017EvalReport.pdf). This implementation plan will be presented to the Evaluation Committee of its Executive Board in January 2018.
Ms. Bouza further said that IMF will thus develop a strategic framework setting the scope, objectives, and boundaries of the IMF’s involvement in social protection. The IMF has always supported universal access to basic services such as education and health and recognizes the important economic benefits of having a strong social protection system that increases countries’ resilience to shocks. Nevertheless, the viability of universal cash transfer systems and the appropriate path to achieving these will depend on country circumstances, including implementation and resource constraints, and social preferences.
Expertise and support for the design and implementation of social protection systems are also provided by bilateral partners, peers and multilateral institutions, such as the ILO and the World Bank. In this regard, ILO and the Bank launched the Global Partnership for Universal Social Protection in 2016 with a number of donor governments and other partners. Indeed, the World Bank has been deepening its lending to help develop social protection systems. As Ms. Grosh reported, the World Bank’s social protection loan portfolio grew from $6.7 billion in fiscal 2010 to $12.5 billion in fiscal 2017 (ending 30 June). Loans have grown especially to help develop social protection systems in low-income countries that borrow from the Bank’s highly concessional International Development Association. Nevertheless, many countries still lack capacity and resources and warrant additional international cooperation on terms provided by official development assistance. The time to build the right social protection architecture is now so as to have it in place during crises.
In sum, there is still much political as well as technical and financial work to be done. Ms. Grosh, in particular, called on civil society to help dispel myths about the poor making poor use of cash transfers, as that discourages public support for social protection. Numerous studies show that women especially use the cash transfers in a socially and economically wise way to cover the basic needs of their family members and, should it be possible, even start small businesses that may help ease a path out of extreme poverty. She also called for civil society advocacy for additional fiscal space to accommodate increased outlays for social protection.
Indeed, the forthcoming UN discussion of financing social protection next April provides an opportunity to advance such an agenda, as also for strengthening international financial support for social protection. The moderator thus encouraged the panelists and those present at the current session to consider offering proposals that might be brought to that Financing for Development meeting. It will undertake a multi-stakeholder discussion, welcoming the participation and inputs of governments, international institutions, civil society and the private sector. He hoped that a broader and deeper discussion on these issues will help governments move toward consensus on global policy priorities and actions so as to advance toward realizing adequate, fair and effective financing of social protection for all.
The list of Speakers comprised: H.E. Mr. Martín García Moritán, Permanent Representative of Argentina to the United Nations; Mr. Stephan Reichert, Deputy Head of Division, Donor Relations and Financing for Development, Federal Ministry for Economic Cooperation and Development (BMZ), Germany; Mr. Vinicius Pinheiro, Special Representative to the United Nations, International Labour Organisation (ILO); Mr. Roberto Bissio, Coordinator, Social Watch/Global Coalition for Social Protection Floors; Ms. Serpil Bouza, Strategy, Policy and Review Department, International Monetary Fund (IMF); Ms. Shari Spiegel, Chief, Policy Analysis and Development Branch, Financing for Development Office/United Nations Department of Economic and Social Affairs.Ms. Gemma Adaba, SocDevJustice/Global Coalition for Social Protection Floors moderated the session.
Side Event on Financing Social Protection Floors at 55th Session of the Commission on Social Development
United Nations, New York, 3 February 2017
The Financing for Development Office of UN-DESA and the International Labour Organization organized a lunch time side event on Financing Social Protection Floors on 3 February 2017 during the 55th Session of the Commission on Social Development. The event was aimed at updating Member States and other stakeholders on the outcomes of an expert group meeting, organized by DESA/FFDO and the ILO in November 2016, held under the auspices of the Interagency Task Force on Financing for Development (IATF).
Synthesis paper prepared for IATF by Barry Herman, SocDevJustice, see (or download) here >>>
Statement to the side event by Barry Herman, SocDevJustice, see (or download) here >>
On 30 November at the United Nations in New York the Financing for Development (FfD) Office and the ILO organized an expert group meeting to explore coherent funding modalities for the social protection floor component of the social compact. It was one of five expert group meetings that the Inter-agency Task Force (IATF) on Financing for Development hosted as part of its responsibility to monitor and report on the implementation of the Addis Ababa Action Agenda on FfD. The Task Force members contributed to the discussion and received expert input from a number of invited academics, experts and other external stakeholders, including the following from the SocDevJustice Initiative: Gemma Adaba, Anis Chowdhury, Michael Cichon, Eva Hanfstaengl, Barry Herman, Katja Hudjo and Isabel Ortiz. The aim was to discuss country experiences in financing social protection floors in order to explore some lessons learned and raise new or innovative ideas for sustainable financing of universal social protection systems, including floors.
See (or download) discussion paper by Gemma Adaba, SocDevJustice here >>>
See (or download) presentation by Isabel Ortiz, ILO Director Social Protection here >>>
See report of the meeting by the UN Secretariat (link to report) here >>>
See Addis Abeba Action Agenda here >>>
Knowing that more than 1.4 billion people still struggle to live on less than $1.25 a day (World Bank), it is obvious that much more must be done to eradicate the scourge of extreme poverty. The International Labour Organization (ILO) and the World Health Organization (WHO) coordinate the Social Protection Floor Initiative (SPF-I) as a joint UN effort to build a global coalition committed to supporting countries in building national social protection floors for their citizens.
A Social Protection Floor (SPF) is the first level of a comprehensive national social protection system that helps to realize human rights for all through guaranteeing:
1. Universal access to essential services (such as health, education, housing, water and sanitation and other services as nationally defined);
2. Social Transfers in cash or kind to guarantee income security, food security, adequate nutrition and access to essential services.
How can you be involved?
By forming a network to get as many signatures as possible to promote the initiative with your own government. You can sign as an individual or as an organization.
See below two Youtube films on the Civil Society Forum on the Social Protection Floor at the United Nations at the occasion of the Commission for Social Development in February 2012:
Countries will develop nationally defined strategies for the progressive realization and sustainability of their floor as well as higher levels of social protection in line with their needs, preferences and financial capacities. Building on existing social protection mechanisms these strategies may include a mix of contributory and non-contributory, targeted and universal, public and private instruments depending on the social economic and political context.
In summary, the SPF is:
• Universal- It includes everyone.
• Rights- based – (enshrined in the Universal Declaration of Human Rights)
• Nationally owned and designed.
• The first step in an ongoing process – not a ceiling of benefits.
• Affordable by all countries.
The most important purpose of the initiative is to convince national government that the Social Protection Floor is needed and wanted by its citizens and must be included in national development policies. We see this initiative as a wonderful opportunity to work together to roll back poverty, to put social protection at the heart of the international development agenda and to strengthen the chance for every person to live with dignity.
For further information see at www.ngosocdev.net
Impact of the Global Crises on Civil Society Organizations
Summary of a study by Eva-Maria Hanfstaengl, New York, 15 February 2010
See the full study here »»»
Download the presentation here >>>
The food, environmental and economic crises have challenged civil society organizations (CSOs) and the communities they serve. A broad-based survey was undertaken in 2009, financially supported by the United Nations Secretariat, that measured the impact of the crises on the operating capacity of CSOs around the world and their expectations as they look ahead. This study examines the current situation of CSOs as indicated by responses from 640 civil society organizations worldwide. It also asks what strategies they are undertaking to cope with a drop in revenue and how they plan to strengthen social-service delivery capacities of CSOs during crisis periods.
A number of civil society organizations (CSOs) have reported substantial reductions in their funding in the wake of the global financial and economic crisis, and they are concerned that this threatens their ability to deliver the services and activities that are required. Seeking to understand better the global scope of this problem, the United Nations Secretariat initiated a study that was guided by a CSO Steering Committee, which included two members of the NGO Committee for Social Development (Marianists International and the Sisters of Charity Federation), as well as the Friedrich Ebert Stiftung (FES) and the UN Non-Governmental Liaison Service. Thus, a global survey was undertaken in the fall 2009 on the impact of the inter-related environmental, financial and economic crises on CSOs and the constituencies they serve. This briefing paper extracts from that study to highlight limitations facing non-governmental organizations as providers of social services for development and the essential role of state institutions.