Sample of 66 Economies: Social Spending Rises and Indicators Improve With IMF-Supported Programs

• Author: Sanjeev Gupta/Benedict Clements/Marijn Verhoeven/Erwin Tiongson
• Position: IMF Fiscal Affairs Department
• Pages: 52-54

Page 52

Social spending has increased and social indicators have improved since the mid-1980s in countries with IMF-supported programs, according to a recent assessment made by the Fiscal Affairs Department in collaboration with other IMF departments. The data for the study were compiled as part of the IMF's ongoing effort to improve its collection and analysis of data on government education and health spending in developing and transition economies. This effort has received additional attention in the wake of IMF Managing Director Michel Camdessus's call for a strengthening of the staff's work in this area (IMF Survey, June 23, 1997). The results of the new analysis largely confirm an earlier analysis of developments in social spending in 23 countries supported by the Enhanced Structural Adjustment Facility (ESAF) (IMF Survey, July 21, 1997), although they indicate more modest increases in real spending.

[GRAPHICS ARE NOT INCLUDED]

These results should be interpreted with caution. Consistent social expenditure data are difficult to collect, owing to lags in the reporting of data, varying coverage of data from country to country, and the fact that local government expenditures may not be included. These considerations make cross-country comparisons problematic. It should be noted that the figures reported here do not include social spending by the private sector, which can be sizable. In 1990, for example, the private sector accounted, on average, forPage 53 45 percent of all health outlays in Africa and 60 percent of such outlays in Asia (see Psacharapouluos and Nguyen, The Role of Government and the Private Sector in Fighting Poverty, World Bank Technical Paper No. 346, 1997).

Education Spending

In a sample of 66 countries with IMF-supported programs for the period 1986-96, education spending rose by 0.1 percentage point as a share of GDP between the preprogram year and the most recent year for which data are available (a period averaging eight years) (see chart, page 52). Changes were larger for a sample of 32 countries supported by ESAF, with education spending rising by 0.2 percent of GDP. Although modest, these changes occurred in the context of countries' efforts to secure fiscal adjustment through reductions in total government outlays. As such, these small increments in spending as a share of GDP led to proportionally larger increases in...