Unicef experts call to ramp up social spending to support economic recovery

It is often argued that social and economic investments that benefit children and poor households are not affordable or that government expenditure cuts are inevitable during adjustment periods. But a paper published by Unicef shows valid alternatives, even in the poorest countries.

The paper, under the title “Identifying Fiscal Space: Options for Social and Economic Development for Children and Poor Households in 182 Countries”, offers an array of possibilities that can be explored to expand fiscal space. Among them, it includes the re-allocating public expenditures, the increasing of tax revenues, lobbying for increased aid and transfers, tapping into fiscal and foreign exchange reserves, borrowing and restructuring existing debt, and/or adopting a more accommodative macroeconomic framework.

The annex of the report, written by Isabel Ortiz, Jingqing Chai and Matthew Cummins (all of them high officers of Unicef), also provides as a resource a summary of the latest fiscal space indicators for 182 countries.

The need to increase fiscal space for social and economic investments has never been greater, according to the paper. Just at a time when populations are most in need of public assistance, fiscal contraction is intensifying and spreading quickly across the developing world.

An earlier paper written by the same authors, “Austerity threatens children and poor households”, shows that 91 developing countries are planning to reduce public expenditures in 2012 —many undergoing excessive contraction, defined as cutting expenditures below pre-crisis levels in terms of GDP.

The authors consider essential to find fiscal space to ensure social spending and investments necessary for sustained equitable results for children and human development.

Given the significance of public investment in enhancing the prospects for equitable and inclusive economic growth and social development, including the achievement of the MDGs, these studies remarked as critical for governments to explore options to ramp up social spending and employment-generating economic investments during —and in support of— the recovery.

Each country is unique, and fiscal space options should be carefully examined —including the potential risks and trade-offs associated with each opportunity— at the national level and considered in an inclusive dialogue of alternatives to ensure a recovery for all, the authors wrote.

More information

Austerity threatens children and poor households (in PDF format): http://bit.ly/pdyiYD

Identifying Fiscal Space (in PDF format): http://bit.ly/q8jaEC

Source: Unicef