Countries with ESAF-Supported Programs Show Progress in Social Spending, Social Indicators

• Author: Sanjeev Gupta/Benedict Clements/Marijn Verhoeven
• Position: IMF Fiscal Affairs Department
• Pages: 217-229

Page 217

Fiscal adjustment lies at the core of the structural reforms undertaken by developing countries under adjustment programs supported by the IMF's enhanced structural adjustment facility (ESAF). A key component of fiscal adjustment is improvement in the composition of public spending to strengthen long-term growth prospects and enhance the well-being of the poor by reallocating spending to the social sectors-health and education-and through greater efficiency of such spending.

A recent study by the IMF's Fiscal Affairs Department of 23 countries with ESAF-supported programs for the period 1986-95 reveals that these countries have made progress in raising public social expenditures and improving social indicators. This overall progress, however, masks considerable variation in experience across countries.

Education Spending

Results from the most recent year for which data are available, relative to the year preceding the introduction of an ESAF-supported program (a period averaging six years), show the increase in real education spending by the government averaged 46 percent. This implies an average annual growth of 6.4 percent a year, with average per capita growth of 3.8 percent a year (see chart, page 228).

Of 23 countries, 20 increased real spending on education, and 17 increased real per capita spending. Average education spending also rose as a share of GDP by !/2 of 1 percentage point, to 4.2 percentPage 228 of GDP (see lower chart, page 229). Education outlays rose as a share of total spending in 16 countries, suggesting that education became a higher priority for countries with ESAF-supported programs.

The extent to which education outlays increased, however, varied markedly across regions and countries. Per capita real spending on education declined by an average of 0.4 percent a year in Africa, compared with a rise of more than 9 percent annually for other countries with ESAF-backed programs-this despite relatively rapid increases in real per capita spending in Burkina Faso, Ghana, and Lesotho. The drop in per capita education spending in Africa reflects declines in some CFA franc zone countries in the wake of the January 1994 devaluation of the CFA franc, in particular in Côte d'Ivoire. Education spending in Africa as a percent of GDP rose by just 0.4 percent, about half the increase recorded outside the region.

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