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Feminist Economics
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Austerity Measures in Developing Countries: Public Expenditure Trends and the Risks to Children and Women
Isabel Ortiz & Matthew Cummins
a a b

UNICEF Division of Policy and Practice , 3 UN Plaza, #420, New York , NY , 10017 , USA E-mail:
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UNICEF Division of Policy and Practice , 3 UN Plaza, #446, New York , NY , 10017 , USA Published online: 10 May 2013.

To cite this article: Isabel Ortiz & Matthew Cummins (2013) Austerity Measures in Developing Countries: Public Expenditure Trends and the Risks to Children and Women, Feminist Economics, 19:3, 55-81, DOI: 10.1080/13545701.2013.791027 To link to this article: http://dx.doi.org/10.1080/13545701.2013.791027

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Feminist Economics, 2013 Vol. 19, No. 3, 5581, http://dx.doi.org/10.1080/13545701.2013.791027

Austerity Measures in Developing Countries: Public Expenditure Trends and the Risks to Children and Women
Isabel Ortiz and Matthew Cummins

ABS T R A C T

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This study examines how austerity measures may have adversely affected children and women in a sample of 128 developing countries in 2012. It relies on International Monetary Fund (IMF) scal projections and IMF country reports to gauge how social assistance and other public spending decisions have evolved since the start of the global economic crisis. The study nds that most developing countries boosted total expenditures during the rst phase of the crisis (200809); but beginning in 2010, budget contraction became widespread, with ninety-one governments cutting overall spending in 2012. Moreover, the data suggest that nearly one-quarter of developing countries underwent excessive scal contraction, dened as cutting expenditures below pre-crisis levels. Governments considered four main options to achieve scal consolidation wage bill cuts/caps, phasing out subsidies, further targeting social safety nets, and reforming old-age pensions each of which would be likely to have a disproportionately negative impact on children and women.

K EY W O RD S
Fiscal consolidation, austerity measures, public expenditures, social spending, crisis recovery JEL Codes: H5, O23, I3

I N T R O D U C T I ON Fiscal austerity has blanketed European and North American headlines since 2010. However, little attention has been paid to the experience of public nances among developing countries during the global economic crisis,1 and even less to how macroeconomic decisions may have affected vulnerable populations. Not only has the developing world been dealing with heightened vulnerabilities due to the earlier and cumulative effects of the food, fuel, and nancial shocks starting in 2008, but in many places, public assistance can be the difference between life and death, meaning that

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severe budget cuts could have grave implications for millions of the worlds poorest and most deprived populations. This study aims to ll the void in current global discussions by offering a framework to understand how austerity measures may be adversely impacting vulnerable groups in developing countries, with a focus on children and women. Such an analysis would ideally be carried out using real-time expenditure data based on ministerial, sectoral, and economic classications as well as across different levels of government, in order to measure actual changes in pro-poor spending allocations, both nationally and locally, during the global economic crisis. However, comparable, crossnational, and disaggregated social expenditure data were not available at the time of writing (2012) for a large sample of developing countries over the 200812 period. To overcome the data limitations, we examine all existing information sources that allow us to gauge how social assistance and other expenditure decisions may have evolved for a sample of 128 developing countries since 2008. Our examination includes (1) a review of historical evidence from the 1980s and 1990s, to see how social expenditures have fared in environments of general budget contraction; (2) examination of available surveys along with health and education spending estimates from the World Bank, to see whether developing countries were able to boost social assistance to buffer their populations from the initial effects of the crisis during 200809; (3) analysis of total government expenditure projections by the International Monetary Fund (IMF), in order to infer how aggregate spending trends may have inuenced social sector allocations in 2012; and (4) a review of policy discussions and other information contained in IMF country reports, to identify the most common adjustment measures that developing countries considered in 201012. The study concludes by discussing the potentially adverse effects of reduced social assistance and specic austerity measures on vulnerable populations, with particular attention to children and women. A GGR E GAT E BU D G ET C U T S A N D S O C IA L E X P E N D IT U R E S : H I S TO RI C A L EVI D E N C E Evaluation of historical experiences suggests that social spending is typically unprotected during environments of overall expenditure contraction. Research on the 1980s debt crisis shows that many developing countries experienced disproportionately large cuts in social spending areas (for example health, education, and social security) when compared to aggregate budget contractions (Giovanni Andrea Cornia, Richard Jolly, and Frances Stewart 1987). Even more importantly, vulnerable populations were found to have suffered the largest cutbacks, both within social and other spending categories, such as economic services and defense. Norman L. Hicks (1991) also nds that, during the period 197084 when a sample 56

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of twenty-four developing countries reduced expenditures, social sectors experienced smaller cuts, on average, than the total expenditure but still received the third highest cuts; defense budgets, in contrast, were found to be the most protected. Country-level analyses further support the ndings of these larger studies. For example, Martin Ravallion (2002) shows that general budget cuts in Argentina during the 1980s and 1990s typically resulted in proportionately greater reductions in social spending. He further shows that spending on targeted social assistance and employment programs was more vulnerable to aggregate spending cuts than spending on more universal social services. Research by Christina Paxson and Norbert Schady (2007) on Peru also indicates that public spending on health contracted sharply during the crisis in the late 1980s, which partly explains the rise in infant mortality. Historical evidence thus highlights the urgent need to protect propoor spending at times of aggregate scal contraction. While the global economic crisis that began in 2008 differs in nature and magnitude from previous crises, it has caused revenue shortfalls among governments in many developing countries. In the current context, what has been the recent experience in social spending essential to the well-being of vulnerable populations?

Social expenditure trends during the global economic crisis Crisis phase I, 200809: Increased public support In terms of social spending, a growing body of evidence indicates that developing countries, on the whole, safeguarded or increased social spending and other priority areas during 200809, despite falling revenues. For example, Isabel Ortiz, Jingqing Chai, Matthew Cummins, and Gabriel Vergara (2010) nd that, on average, nearly one-quarter of the total announced scal stimulus amount was directed at social protection/social support programs in a sample of sixteen developing countries. When looking at a group of nineteen low-income countries, Yongzheng Yang, Paolo Dudine, Nkunke Mwase, Sibabrata Das, Eteri Kvintradze, and Pritha Mitra (2010) show that sixteen governments budgeted higher social spending in 2009 compared to the previous year. Available spending outturn data from the IMF (2010a) indicate that the median value of social spending increased by 0.5 percent of gross domestic product (GDP) between 2008 and 2009 among developing countries in Sub-Saharan Africa, with real social expenditure growth accelerating from 4.8 to 6.8 percent. Our analysis of the latest available health and education spending estimates from the World Banks (2012) World Development Indicators further supports the ndings that governments protected and/or increased social expenditures. When comparing the average expenditure trends 57

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during the rst phase of the crisis (200809) with those during the precrisis phase (200507), we nd that, on average, spending in the health and education sectors increased by approximately 0.2 and 0.1 percent of GDP among developing countries with available data. In terms of real growth (or, in other words, the value of nominal expenditure adjusted by the consumer price index), health and education spending grew by an average of 21 and 15 percent, respectively, over the two periods. Available data, however, present limitations to understanding actual social spending trends during the rst phase of the crisis. While there is evidence of moderate upticks in resources allocated to two key social sectors in 200809, the data do not cover all social expenditure categories, such as social security. For example, if social protection spending increased, these allocations may not be captured in health and education estimates due to classication and reporting differences at the national level. The relatively small sample size of developing countries with education spending estimates through 2009 also falls short of offering a full picture of actual investment trends (thirtynine countries versus 133 with health expenditure data). Lastly, additional research hints that scal stimulus packages may not have beneted certain social sectors to the degree that earlier studies have suggested.2 On the whole, the available evidence suggests that developing countries did, on the aggregate, protect or increase levels of support to the health and education sectors during 200809. Investments in these social sectors were largely facilitated by an overall expansionary scal stance and likely reected a greater policy emphasis on protecting vulnerable populations from the negative shocks of the crisis. Crisis phase II, 201012: Reduced public support? At the time of writing, data shortcomings made it impossible to assess actual levels of social spending during 201012. Although the IMF publishes current and projected scal data in the World Economic Outlook, there are no near real-time data series on social expenditures. Similarly, the World Bank compiles expenditures by health and education sectors in the World Development Indicators, but there is a time lag of at least two years before the data become available. While such numbers do offer a picture although imperfect of these social spending categories for the earlier phase of the crisis, there is no such information to appraise trends during the later period. Looking at available cross-national budget studies, recent surveys suggest a bleak outlook for social expenditures during the second phase of the crisis. For example, Katerina Kyrili and Matthew Martin (2010) nd that two-thirds of fty-six low-income countries surveyed were cutting budget allocations in 2010 to one or more pro-poor sectors, which included education, health, agriculture, and social protection. They further conrmed that while expenditures on infrastructure, health, and agriculture rose in 2009, 58

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they fell in 2010, with social protection allocations contracting in 2010 and ending the period more than 0.2 percent of GDP lower than in 2008, on average. Dirk Willem te Velde, Charles Ackah, Olu Ajakaiye, Ernest Aryeetey, Debapriya Bhattacharya, Massimiliano Cal, Tayo Fakiyesi, et al. (2009) also observed important reductions in planned social spending allocations for the 2010 budgets among many of the ten developing countries in their sample. Moreover, Alexander Chubrik, Marek Dabrowski, Roman Mogilevsky, and Irina Sinitsina (2011) conclude that four of six former Soviet Union countries studied were expected to decrease education expenditure in terms of GDP between 2009 and 2010, with Kyrgyzstan and the Russian Federation undergoing real declines in spending. In contrast to these ndings, policy discussions described in recent IMF country reports indicate a greater emphasis on safeguarding propoor or priority spending than in the past, most notably in low-income countries supported under the IMFs new lending framework. However, there are numerous problems associated with denitions of so-called priority expenditures.3 When additionally combined with data limitations, it is impossible to estimate the evolution of social spending over the 201012 period. Given the current lack of evidence on actual social expenditures in developing countries since 2010, we turn to total government expenditures in order to gauge how overall trends may be affecting social sector allocations. Data and methodology Our analysis of public expenditure trends in developing countries is based on IMF projections contained in the World Economic Outlook (2011a), which is the only source of comparable, cross-national scal data. Several data caveats are worth mentioning. First, the scope of expenditure data varies across countries. While in most instances the data refer to central and local governments, for some countries, the data refer to the public sector, which includes public enterprises. Second, total government spending projections may differ from the estimates used in this study as more economic and scal indicators become available. Third, expenditure data from IMF sources may vary from those reported in national budgets due to alternative projection assumptions and methods. In terms of methodology, we analyze changes in total government spending using two unique measures: (1) public expenditure as a percentage of GDP, and (2) the real value of public expenditure. Regarding the former, this is the most commonly used metric for cross-national comparisons of public expenditures, and the most useful for assessing a governments scal position. For the latter, absolute spending changes offer a better indication of the possible impact on the real welfare of populations. We apply both of these measures to the 128 developing countries that have 59

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scal estimates across the three unique periods of the crisis: 200507 (precrisis), 200809 (crisis phase I: scal expansion), and 201012 (crisis phase II: scal contraction). Results Analysis of scal projection data veries two distinct phases of government spending patterns since the onset of the global economic crisis. During the rst phase, most developing countries moved swiftly to introduce scal stimulus packages and boost spending, which largely characterizes 2008 09. Beginning in 2010, however, most governments started to scale back stimulus programs and slash budgets, a trend that appears to have gained momentum in 2012. We present the detailed results for each of these phases, after which we examine whether some countries may have experienced excessive contraction during 201012. Crisis phase I, 200809: Fiscal expansion The vast majority of governments boosted public expenditures to buffer the impact of the different global shocks on their populations in what could be described as the expansionary phase of the global economic crisis. When comparing pre-crisis spending levels to this rst phase, nearly three-fourths of our sample of developing countries (ninety-four out of 128) ramped up public expenditures, with average expansion amounting to 3.7 percent of GDP. Developing countries in Sub-Saharan Africa undertook the largest spending increases, with twenty-six of the forty-one countries expanding by 4.4 percent of GDP, on average. Also noteworthy, nearly all countries in Eastern Europe and Central Asia (twenty out of twenty-two) raised spending by more than 4 percent of GDP, on average. Positive trends are also evidenced in terms of real government spending. More than 90 percent of developing countries increased real expenditures, with the average growth equaling nearly 25 percent when comparing 2008 09 and 200507 average spending levels. Expansions were largest in Eastern Europe and Central Asia, along with East Asia and the Pacic, with real expenditure growth amounting to roughly 30 percent, on average, in both of these regions. As described above, overall increases in aggregate expenditures appear to have positively impacted the spending allocations to several social sectors. Crisis phase II, 201012: Fiscal contraction Beginning in 2010, in a second phase of the crisis, most governments started to withdraw scal stimulus programs and scale back public spending. Overall, an estimated seventy developing-country governments (55 percent 60

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of the sample) reduced total expenditures by 2.6 percent of GDP, on average, between 2009 and 2010 (see Table 1). This shift was most acute in countries in the Middle East and North Africa, both in terms of breadth (more than 80 percent of countries in the region contracted), as well as depth (4 percent of GDP, on average). At the time of writing, the outlook for 2011 and 2012 was equally troubling. In 2011, sixty-two developing countries (roughly half of the sample) were contracting government expenditures by an average of 2.2 percent of GDP, while ninety-one (more than 70 percent of the sample) were forecasted to adopt further austerity measures during 2012 to around 1.5 percent of GDP, on average. For both years, Eastern Europe and Central Asia had the largest percentage of countries expected to reduce aggregate spending thirteen of twenty-two countries (59 percent) in 2011 and nineteen of twenty-two countries (86 percent) in 2012. Sub-Saharan Africa, on the other hand, was the region with the biggest anticipated expenditure contractions 3.4 percent, on average, for nineteen of the forty-one countries in 2011, and 2 percent, on average, for twenty-seven of the forty-one countries in 2012. Of the scal changes anticipated between 2011 and 2012, the most alarming is the growing number of countries that were projected to cut spending in 2012. Overall, an additional twenty-nine countries were forecasted to undergo expenditure reductions between 2011 and 2012, with the biggest changes occurring in Latin America and the Caribbean (from fourteen to twenty-two countries), the Middle East and North Africa (from three to nine countries), and Sub-Saharan Africa (from nineteen to twenty-seven countries). It is also worth mentioning that the number of high-income countries that were expected to undergo scal contraction reached forty-one of forty-nine countries in 2012, up from thirty-eight countries in 2011. Although less severe, scal contraction is also evidenced in terms of changes in real spending. At the time of writing, an average of 30 percent of all developing countries were anticipated to experience negative growth in real government expenditures during 201012, a number that remains constant throughout the period. While spending growth was forecasted to remain positive for the sample as a whole, on average, there was a downward trend from around 5.5 percent during 201011 to 2.8 percent in 2012. For those countries that were projected to experience negative growth, real declines amounted to 5.5 percent annually, on average, over the three-year period. Regionally, Sub-Saharan Africa appears to be the hardest hit, as approximately one-third of countries were expected to decrease real spending by 8.2 percent in 2011, which only slightly tapers off in 2012. Estimates also suggest that the Middle East and North Africa were increasingly tightening real expenditures, with declining spending growth affecting just a single country in 2011 but jumping to ve in 2012. 61

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Table 1 Projected total government spending trends, 201012

(A) Change in spending (year on year, % GDP) (B) Growth of real spending (year on year, %) 2010 5.6 5.3 23.5 3.1 3.4 36.4 3.5 9.9 27.6 0.2 5.5 45.5 5.9 14.0 12.5 8.4 6.8 24.4 5.1 6.6 28.1 2011 5.3 4.5 23.5 4.6 3.1 31.8 5.3 4.5 24.1 9.9 3.9 9.1 7.8 4.1 25.0 5.7 8.2 31.7 5.9 5.6 26.6 2012 1.9 5.4 29.4 2.2 2.4 13.6 1.8 2.8 31.0 1.3 3.3 45.5 5.6 2.7 25.0 4.1 5.8 29.3 2.8 4.2 28.1

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Region (n=) East Asia and Pacic (17)

Indicator Overall average change Average contraction Percent of countries contracting Overall average change Average contraction Percent of countries contracting Overall average change Average contraction Percent of countries contracting Overall average change Average contraction Percent of countries contracting Overall average change Average contraction Percent of countries contracting Overall average change Average contraction Percent of countries contracting Overall average change Average contraction Percent of countries contracting

2010 0.0 1.5 58.8 1.2 2.5 63.6 0.7 2.6 55.2 3.3 4.0 81.8 0.1 2.9 50.0 0.1 2.6 41.5 0.6 2.6 54.7

2011 0.1 1.7 47.1 0.5 1.6 59.1 0.1 1.4 48.3 0.6 2.8 27.3 0.6 1.5 50.0 0.5 3.4 46.3 0.1 2.2 48.4

2012 0.7 1.6 64.7 0.9 1.0 86.4 0.7 1.1 75.9 1.3 2.0 81.8 0.1 1.8 37.5 0.8 1.9 65.9 0.8 1.5 71.1

Eastern Europe and Central Asia (22)

Latin America and Caribbean (29)

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Middle East and North Africa (11) South Asia (8) Sub-Saharan Africa (41) All developing countries (128)

Source : Authors calculations based on IMF (2011a).

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Table 2 Changes in total government spending, 201012 average versus 200809 average (in percentage of GDP)
Total sample Number of countries Region East Asia and Pacic Eastern Europe and Central Asia Latin America and Caribbean Middle East and North Africa South Asia Sub-Saharan Africa All developing countries 17 22 29 11 8 41 128 1.2 0.6 0.4 2.7 0.8 0.4 0.1 64.7 36.4 69.0 18.2 50.0 68.3 57.0 2.2 2.5 2.3 2.2 3.4 2.2 2.3 35.3 63.6 31.0 81.8 50.0 31.7 43.0 0.8 2.3 3.7 3.8 1.8 3.6 2.9 Avg. spending Expanded Percent of Avg. Contracted Percent of Avg.

countries spending

countries spending

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Source : Authors calculations based on IMF (2011a).

Contrasting the phases To better appraise the breadth and depth of contractions in government spending among the cohort of developing countries, it is also useful to compare the expansionary and contractionary phases of the crisis. When taking the average spending values of the stimulus phase (200809) and contrasting them against the forecast expenditures of the austerity phase (201012), fty-ve of 128 developing countries (or 43 percent of the sample) were expected to contract total government expenditure by an average of 2.9 percent of GDP (see Table 2). In real terms, just over 20 percent of developing countries were projected to undergo negative spending growth when comparing the unique periods. This nding, particularly that of the important cuts already undertaken in 2010, raises concerns about premature scal tightening, especially given the rising likelihood of a double-dip recession in many developing countries at the time of writing. Furthermore, expenditure contraction at the aggregate level appears to support evidence that priority social spending has been adversely impacted since 2010. At the country level, a number of governments were projected to undergo large spending cuts in terms of GDP when comparing the expansionary and contractionary phases of the crisis (see Figure 1A). In particular, large contractions (412 percent of GDP) were expected in thirteen countries, including Angola, Antigua and Barbuda, Azerbaijan, Belarus, Botswana, Burundi, Djibouti, Georgia, Grenada, Iraq, Jamaica, Swaziland, and Yemen. In terms of real spending growth, Antigua and Barbuda, Botswana, Georgia, 63

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Figure 1 Projected change in government spending, 201012 average versus 200809 average: (A) Total spending (percentage of GDP); (B) Growth of real spending (as a percentage) Source : Authors calculations based on IMF (2011a).

Grenada, Iran, Jamaica, Madagascar, Montenegro, Romania, and Swaziland were projected to reduce total expenditure by more than 5 percent when comparing the average spending values over the two periods (see Figure 1B). Given that this picture reects the combined effects of reduced spending 64

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along with an eroding real value of expenditures due to higher local prices, Georgia and Iran stand out as having dangerous levels of ination during 201112. What induced these change in scal policy stances between the rst and second phase of the crisis? In February 2010, two IMF Board papers (2010b, 2010c) called for large-scale scal adjustment (meaning a reduction in government budget decits) where the recovery is securely underway as well as for structural reforms in public nance to be initiated even in countries where the recovery is not yet securely underway (IMF 2010b: 3, 2010c: 1). While these papers focused on higher income economies, they were the rst signs of a worldwide policy reversal, which had the support of the G-20. The sovereign debt crises in Europe raised concerns about public debt levels in governments worldwide. It is less clear, however, why the drive to slash budgets in developing countries was as quick, intense, and prolonged as our analysis of spending data has revealed. One of the principal criticisms is the role of policy inuence/pressure from international nancial institutions. During the rst stage of the crisis, the IMF raised expectations about reforming its fundamental policy approach to crisis response, seemingly abandoning neoliberal prescriptions. As the crisis evolved, however, it became clear that, in practice, there were few changes to its standard recommendations to developing countries regarding monetary and scal policies (Terry McKinley 2010; Elisa Van Waeyenberge, Hannah Bargawi, and Terry McKinley 2010). Moreover, according to critical voices, the IMF failed to revise its rigid and orthodox approach to macroeconomic policy guidelines and based much of its policy design on low scal decits, low ination rates, exible exchange rates, and trade and nancial liberalization (Nria Molina-Gallart 2010). While inuence and pressure from international nancial institutions may partly explain the breadth and scope of expenditure contraction observed in developing countries since 2010, few governments have IMF programs, and there is a clear need for more research to better understand why governments followed the trend of contractionary policies at a time of global recession. There are also many questions behind the logic of austerity. Defenders of scal consolidation often reference a dated IMF study of seventy-four episodes of spending contractions in twenty industrialized countries during 197095, which found that sharp budget cuts can lower interest rates and encourage consumption and investment (John C. Dermott and Robert F. Wescott 1996). There is, however, limited support to validate that scal austerity can stimulate economic activity, especially among developing countries and in the context of a global crisis. In low-income countries in Sub-Saharan Africa, for example, an effective socioeconomic recovery strategy should be based on an expansionary scal policy that fosters public investment and increases domestic revenues, a managed exchange-rate 65

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Table 3 Changes in total government spending, 201012 average versus 200507 average (in percentage of GDP)
Total sample Number of countries Region East Asia and Pacic Eastern Europe and Central Asia Latin America and Caribbean Middle East and North Africa South Asia Sub-Saharan Africa All developing countries 17 22 29 11 8 41 128 3.7 3.1 2.5 1.4 2.9 2.1 2.3 94.1 86.4 82.8 27.3 87.5 73.2 77.3 4.0 3.9 3.8 4.7 3.6 4.4 4.0 5.9 13.6 17.2 72.7 12.5 26.8 22.7 1.4 2.3 4.0 3.6 1.9 4.2 3.6 Avg. spending Expanded Percent of Avg. Contracted Percent of Avg.

countries spending

countries spending

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Source : Authors calculations based on IMF (2011a).

regime that promotes export competitiveness and currency stability, and a monetary policy that supports scal expansion and export promotion by achieving low real interest rates to encourage private investment and alleviate public sector debts (John Weeks and Terry McKinley 2007; Robert Pollin, Gerald Epstein, and James Heintz 2008). Excessive contraction? There are risks associated with premature as well as excessive consolidation. We dene excessive scal austerity as reducing government expenditure below pre-crisis levels (the average spending values during 200507). Comparing the 201012 and 200507 periods suggests that the majority of developing countries have maintained total expenditures far above pre-crisis levels. Overall, average spending levels in the contractionary phase of the crisis were about 4 percent higher in GDP terms than those in the pre-crisis phase in more than three-fourths of developing countries (see Table 3); in real terms, public expenditures were 43 percent above earlier levels in more than 90 percent of the sample. These ndings indicate that most governments have maintained considerably higher levels of public assistance since the start of the global economic crisis. Although these spending trends were, indeed, positive signs on the aggregate, there were many countries that appeared to experience excessive contraction. In terms of GDP, analysis of scal data reveals that twentynine developing countries can be characterized as having adopted excessive reductions in government spending. Eleven of those countries were 66

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projected to be spending, on average, more than 5 percent less during the second phase of the crisis when compared to the pre-crisis period (Antigua and Barbuda, Belarus, Eritrea, Grenada, Iraq, Jordan, Madagascar, Republic of Congo, Seychelles, Sudan, and Yemen). In terms of real spending, eight countries were estimated to be spending less in 201012 than during 2005 07 (Antigua and Barbuda, Eritrea, Fiji, Grenada, Iran, Jamaica, Madagascar, and Seychelles). Some argue that limiting government spending to below pre-crisis levels may well be justied in those instances where public nances were previously viewed as unsustainable. While this may be true, the rapid and deep reversal in public expenditures exhibited by many developing countries during 201012 poses serious threats to the well-being of vulnerable populations, especially those who depend on public assistance to meet basic needs. In what follows, we assess the policy choices that governments are undertaking to achieve reduced scal targets and then discuss the possible impact of such decisions including lower social spending allocations and other austerity measures on vulnerable households. M A I N A D J U S TM EN T M EA S U RES D U R IN G 2 0 1 0 1 2 Methodology How were developing countries achieving scal adjustment? To answer this question, we review policy discussions and other information contained in IMF country reports, which cover Article IV consultations, reviews conducted under lending arrangements (for example, Stand-by Arrangements and Extended Credit Facility), and consultations under nonlending arrangements (for example, Staff Monitored Programs). Overall, we look at 124 country reports published between January 2010 and September 2011 and identify the different policy options that governments considered or implemented to achieve scal tightening (see Annex 2 of Isabel Ortiz, Jingqing Chai, and Matthew Cummins [2011a] for complete details). Two caveats warrant mentioning. First, the ndings are solely based on the authors interpretations of IMF country reports. Second, to the extent that measures eventually adopted by governments may differ from those under consideration at the time of writing, this analysis is only indicative, and actual outcomes require verication. Results We nd that developing countries considered four main adjustment policies to achieve planned budget cuts (see Appendix Table 1). The most popular austerity measures were cutting or capping the wage bill of public sector employees. As recurrent expenditures, such as salaries, tend to be the largest component of national budgets, an estimated fty-six developing countries 67

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were looking to reduce the wage bill, which is often carried out or planned as a part of civil service reforms. This policy stance emerges, more or less, equally across all developing regions. A second widespread policy option to reduce government spending is to phase out or remove subsidies. Overall, fty-six developing countries appeared to be cutting subsidies, predominately on fuel, but also on electricity and food items. This measure appeared particularly common in governments in Sub-Saharan Africa. Further targeting of social safety nets emerges as a third common policy channel to contain overall expenditures and achieve cost savings. Our review indicates that thirty-four developing countries were considering rationalizing and further targeting their spending in social protection systems. This includes some developing countries that were under tight scal pressures, such as the Philippines, as well as those that have a legacy of extensive social welfare systems, such as Mongolia. Lastly, many governments appeared to be reforming old-age pensions to scale back public spending. Approximately twenty-eight developing countries were discussing different changes to pension systems, such as raising contribution rates, increasing eligibility periods, increasing the retirement age, and lowering benets. This adjustment measure frequently appeared in policy discussions in middle-income countries, especially in Eastern Europe and Latin America, which had already reformed their pension systems in recent years. Many of the different pension options under consideration were also linked to reforms of the public health sector. Overall, at least one policy option was being discussed in 106 developing countries, with two or more options considered in sixty-nine countries and all four options in ten countries (Antigua and Barbuda, Belarus, Egypt, Fiji, India, Jordan, Nicaragua, Romania, St. Kitts and Nevis, and Tunisia). A small number of countries were also contemplating or planning alternative options by expanding wages, subsidies, social transfers or pension benets, and/or lowering taxes on basic goods, despite scal constraints (see Appendix Table 1).

B U DGE T C U T S A N D TH E R I S K S T O V U L N E R A B L E PO PU LATI O N S General reductions in social spending As mentioned, data shortcomings preclude our ability to measure actual social spending trends during 201012. However, aggregate budget cuts have been intensifying across most developing countries since 2010, which may have a direct impact on the overall level and quality of public assistance and, hence, threaten vulnerable populations, especially those whose well-being and survival depends on such support. 68

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The lack of child and gender disaggregated data, along with child- and gender-sensitive budgeting in developing countries, makes it difcult to carry out a comprehensive analysis of how current social spending cuts are affecting children and women. Stephanie Seguino (2010), however, summarizes some of the likely impact of health spending cuts in some developing countries. In particular, given that more than half of public health budgets in Sub-Saharan Africa depend on foreign aid, funding shortfalls in the Global Fund to Fight HIV/AIDs, Tuberculosis, and Malaria, for example, signify increasing stress on women who are the predominant caretakers of sick persons (Seguino 2010). As further highlighted by the case of Tanzania, which was the rst country in Sub-Saharan Africa to cut its annual HIV/AIDS budget by a staggering 25 percent, there are also health sector risks in terms of human resources, service delivery, and long-term planning (Kristin Palitza 2009). Evidence from high-income countries further indicates that children and women were disproportionately affected by reduced social expenditures. For instance, a gender audit of the June 2010 budget in the UK shows that women were bearing 72 percent of the burden of national cuts (UK Womens Budget Group 2010). Fewer housing benets, lower pensions, and decreased child-related support including pregnancy health services, maternity grants, and child benets are among the principal threats resulting from social spending cuts, which highly impact children. Anna Mapson (2011) highlights additional risks to British children and women. Higher fees and reduced assistance make it more difcult for women to pursue education, thus reducing their job prospects and earning potential and furthering gender inequities. Budget cuts to primary schools also disproportionately impact both children and their mothers, who tend to be the primary caregivers. Increased violence and abuse against children and women was another serious risk identied with funding cuts to social protection services and legal aid. When combined with the historical evidence of the negative impact of structural adjustment on children and women in developing countries in the 1980s, these experiences from the UK suggest some of the potential dangers that could be replicated in developing countries that scaled back social spending as part of scal consolidation efforts (Cornia, Jolly, and Stewart 1987; Mary Chinery-Hesse, Bina Agarwal, Tendai Bare, and Marjorie Lamont Henriques 1989; Franois Bourguignon, Jaime de Melo, and Christian Morrisson 1991). We now look at the potential dangers associated with the main austerity measures being discussed in developing countries. Wage bill cuts or caps Well designed and executed scal savings can be used for raising low wages for essential public service providers and/or for expanding essential 69

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posts required to meet the Millennium Development Goals (MDGs).4 For instance, wage and employment reforms in Gabon, which in 2011 included freezing public sector salaries and cutting annual hiring by half, were being complemented by increasing health and education personnel (IMF 2011b). Similarly, Burundi is expected to maintain a hiring freeze, which was enacted on civil servants in 2010, but will expand recruitment for priority sectors, including health, education, and justice (IMF 2011c). However, at least in the short term, there are risks that wage bill cuts or caps may translate into salaries being reduced or eroded in real value, payments in arrears, hiring freezes, or employment retrenchment. Such measures can adversely impact the delivery of basic social services, particularly in highpoverty areas. United Nations Childrens Funds (UNICEF) analysis of salary information for primary teachers and nurses shows that their pay in real terms was diminished by increases in local prices during 2009 (Jingqing Chai, Isabel Ortiz, and Xavier R. Sire 2010), a nding echoed in several countries in the former Soviet Union (Chubrik et al. 2011). The data further suggest that teachers and nurses are not adequately compensated in many developing countries when comparing their pay with at least one income or cost-of-living benchmark. There is also an important gender impact, as the public sector is a main source of formal employment for women in many developing countries. Thus, wage cuts, freezes, or arrears in certain sectors, such as health and education, will disproportionately affect women. As low pay is a key factor behind absenteeism, informal fees, and brain drain, it is imperative to protect the number of positions and level of compensation of essential public sector employees, including teachers, medical staff, and social welfare and child protection workers. Decisions on wage bills must therefore safeguard and enhance, when scal situations improve the pay, employment, and retention of priority social sector staff to protect child and family-related services in order to support human capital development for long-term growth and the achievement of the MDGs. Wage bill decisions must also be based on gender analysis, since women can suffer disproportionately from job cuts and public sector pay freezes, as highlighted by recent evidence from the UK presented earlier (Mapson 2011). Phasing out subsidies The development of more targeted social safety nets as a way to compensate the poor often accompanies the removal or reduction of subsidies. This policy approach is largely driven by the logic that generalized subsidies can be ineffective, costly, and inequitable, while replacing them with targeted transfers can remove market distortions and more effectively support vulnerable groups (David Coady, Robert Gillingham, Rolando Ossowski, John Piotrowski, Shamsuddin Tareq, and Justin Tyson 2010). However, 70

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governments must carefully assess the human development and economic impact of lowering or altogether removing food or fuel subsidies and ensure that measures that adequately safeguard the access and well-being of vulnerable populations and overall recovery prospects accompany any such policy change. Some countries have removed food subsidies at a time when there is still a high level of need for public nutrition assistance. Isabel Ortiz, Jingqing Chai, and Matthew Cummins (2011b) nd that domestic food prices rose steadily during the second half of 2010 in a sample of fty-eight developing countries, a trend that likely persisted through 201112 given that global food prices remained at record levels (Food and Agricultural Organization of the United Nations [FAO] 2013). Until a well-functioning social safety net is in place, there is a strong case for extending general consumer subsidies, which can be possibly modied to encourage pro-poor self-selection (for example, providing subsidies on food items that the poor tend to consume disproportionately more) as a short-term measure to protect children and poor households from unaffordable food costs. Moreover, while subsidies are often withdrawn quickly, a functioning social protection system takes a considerable amount of time to design and implement. This means that any timing mismatch immediately threatens the most vulnerable groups, especially infants and young children who can experience irreversible, longterm adverse effects from nutritional shortfalls. Our review of the latest IMF country reports (see Appendix Table 1 for details) also shows that many countries were contemplating reducing fuel and energy subsidies in order to cut public expenditures. Indeed, the wide uctuations in international oil prices can make fuel and energy subsidies costly and, therefore, an obvious target during scal austerity. However, the negative ripple effects of reversing this policy should be carefully examined. First, cutting fuel subsidies can have a disproportionate negative impact on vulnerable groups, whose already limited incomes are further eroded by any of the resulting inationary effects on basic goods and services. Second, removing fuel subsidies can hinder overall economic growth, since higher costs of goods and services drag down aggregate demand. Third, any slowdown in economic growth will lower tax receipts and create new budgetary pressures which is, ironically, the original impetus of the subsidy policy reversal. Further targeting of social safety nets To reconcile poverty reduction with scal austerity, economists often advise governments to better target their spending when cuts are called for (Martin Ravallion 1999). Indeed, further targeting can deliver more costeffective social assistance and yield scal savings over the medium term. In the short term, however, there are limitations inherent to designing and 71

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implementing new targeting schemes, which can result in the unintended effects of further excluding marginalized children and their families, especially where poverty is widespread. One major constraint is that means-tested targeting is often costly and requires a high level of civil service capacity. Many studies document the high administrative costs of accurately identifying the poor (for example, David Coady, Margaret Grosh, and Josh Hoddinott [2004]; Pradeep Srivastava [2004]). While self-selection and community-based mechanisms can lower overhead, in many cases, targeting schemes end up being more expensive than universal ones. Weak public institutions that are unable to manage the detailed administrative requirements of selective policies further complicate cost concerns (Thandika Mkandawire 2005). Another serious danger is that targeting reforms can result in large undercoverage. Due to a conuence of budgetary and political economy considerations, the scope of the target often falls short of adequately covering vulnerable populations and, instead, tends to focus only on the extreme poor, such as in Moldova (Ortiz et al. 2010). This approach leaves many vulnerable persons, especially poor children and women, excluded from receiving cash benets at a time when their need for public assistance is high. Thus, a strong case may be made for extending universal transfers (for example, to families with children or to households headed by women) or for carrying out some form of geographic targeting to provide immediate support to vulnerable groups facing unexpected and prolonged shocks until administrative capacity is developed to effectively implement more sophisticated systems. Furthermore, current practices of targeting by income or consumption poverty do not adequately take into account other dimensions of poverty such as lack of ready access to schools, clean water, health facilities, or sanitation systems. As a result, those children whose families meet the minimum consumption criteria but remain vulnerable to dropping out of school, malnutrition, and/or mortality due to the deprivations of a safe and enabling environment are at risk of being left out. Several studies indicate that this exclusion risk could be statistically signicant (for example, Sabina Alkire and Suman Seth [2008]; Harold Coulombe and Jingqing Chai [2010]), which indicates the need for setting targeting criteria beyond consumption or income poverty measures, including gender dimensions. Old-age pension reform Pension reforms in developing countries mirror cost-saving pension and healthcare policies adopted in many high-income countries. The main risk of this policy choice is straightforward: vulnerable groups are either excluded from receiving benets or critical assistance is diminished at a time when these groups are most in need. For poor households, having an older 72

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person at who receives a pension is an asset, since it is a source of income to sustain the basic needs for the whole family, including children and women (Mark Gorman 2004). Moreover, because women are more dependent on public support and more likely to face pensioner poverty than men, pension cuts are likely to have a disproportionate negative impact on women and further gender disparities, as demonstrated by the UK Womens Budget Groups (2010) recent analysis. As a result, it is imperative that policymakers complement any systematic pension reforms with specic measures that safeguard income support and the delivery of essential services, especially health, to older persons and their families. C O N C LU S I O N S Most developing countries moved swiftly to counter the effects of the global economic crisis by introducing scal stimulus packages during 200809, which protected or increased assistance to social sectors. In a second phase of the crisis (2010 onward), however, many governments began to cut decits and reduce overall expenditures. At the time of writing, our analysis conrms that the scope of austerity had widened quickly, with seventy developing countries reducing total expenditures by nearly three percent of GDP, on average, in 2010, and ninety-one developing countries expected to reduce annual expenditures in 2012. Moreover, comparing the 201012 and 200507 periods suggests that nearly one-quarter of developing countries were undergoing excessive contraction. Even more worrisome, the scope of expenditure consolidation widened considerably among developing countries since a previous analysis was carried out in October 2010 (Ortiz et al. 2010). Budget cuts pose clear risks to children and women in terms of their impact on the level and quality of essential public assistance. Despite data gaps, aggregate scal contraction during 201012 likely affected social sector spending allocations and jeopardized the ability of social protection systems to provide adequate support to vulnerable children and women, even in countries with a policy intention of safeguarding so-called priority spending. The adverse effects of the main austerity measures being adopted were also likely to be disproportionately felt by children and women: wage bill reductions can hamper the delivery and quality of essential health, nutrition, and education goods and services, especially in rural areas; subsidy reversals can make food, transport, and other basic goods unaffordable; and rationalizing social protection schemes, including pension benets, runs a high risk of exclusion at a time when children and women are most in need. And there are other risks in the current policy environment. While this article has exclusively focused on expenditure-side measures, many governments were also altering consumption taxes on basic goods, such as food items and fuel and energy products, by increasing or expanding 73

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value-added tax (VAT) rates or sales taxes. In the absence of exemptions, such revenue-side policies can further erode the already limited incomes of vulnerable households and stie general economic activity; they can also be regressive, placing a disproportionate burden on poorer households (Ortiz, Chai, and Cummins 2011a). As a result, tax reforms pose further dangers to children and women. Protecting vulnerable populations is critical to equitably sharing the adjustment costs and avoiding detrimental or even irreversible effects on children and women. However, macroeconomic and scal decisions are often taken without comprehensive assessment of their potential impact on employment, human development, and inclusive and sustainable growth. It is therefore imperative that decision makers carefully review the distributional impact, as well as possible alternative policy options, for economic and social recovery. To mitigate the risk of social spending being adversely impacted during expenditure contraction in the short term, it is important to focus policies on preserving and expanding pro-poor expenditures within a framework of medium-term scal sustainability. It is also imperative that policymakers recognize that spending cuts are not inevitable. In fact, there are a number of alternative options to boost social investments, even in the poorest countries, which include reallocating current expenditures, increasing tax revenue, lobbying for increased aid and transfers, tapping into scal savings and foreign exchange reserves, borrowing or restructuring existing debt, and adopting a more accommodating macroeconomic framework (Isabel Ortiz, Jingqing Chai, and Matthew Cummins 2011c). Not only can these viable options counter the intensifying drive toward austerity, but they can also provide essential support to vulnerable households when they are most in need and ensure that economic recovery is inclusive of all persons, including children and women. Isabel Ortiz UNICEF Division of Policy and Practice 3 UN Plaza, #420, New York, NY 10017, USA e-mail: iortiz@unicef.org Matthew Cummins UNICEF Division of Policy and Practice 3 UN Plaza, #446, New York, NY 10017, USA e-mail: mcummins@unicef.org N O TES
1

Developing countries are dened as non-high income countries according to World Bank classications, or, in other words, all low- and middle-income countries.

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2

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See, for example, Jim Brumby and Marijn Verhoeven (2010), who conclude that growth in health and education spending fell below 2 percent during 2009 after averaging nearly 10 percent between 2005 and 2008 in a sample of 108 developing countries. National strategies and policy discussions commonly identify the need to protect priority pro-poor social expenditures, indicating some consideration of distributional impacts. However, there is no universally accepted denition of priority expenditures, and the denition changes from country to country. In practice, primary education and basic health are common elements of priority pro-poor social spending; but governments may not view as priority and therefore may exclude other investments with positive distributional impacts on vulnerable groups, such as social protection, water supply and sanitation, or public housing. Our reading of recent IMF country reports suggests that a wide variety of spending categories such as electricity, judiciary, and, in some cases, defense-related were included as priority and therefore protected under country programs. These approaches raise questions about the effectiveness of priority setting in safeguarding social spending areas that are most essential to directly supporting vulnerable populations. For example, according to United Nations Educational, Scientic and Cultural Organization (UNESCO; 2010), the rate at which teaching posts are created will need to increase if universal primary education is to be achieved by 2015.

R EF EREN C ES
Alkire, Sabina and Suman Seth. 2008. Measuring Multidimensional Poverty in India: A New Proposal. Working Paper 15, Oxford Poverty and Human Development Initiative (OPHI). Bourguignon, Franois, Jaime de Melo, and Christian Morrisson. 1991. Poverty and Income Distribution during Adjustment: Issues and Evidence from the OECD Project. World Development 19(11): 1485508. Brumby, Jim and Marijn Verhoeven. 2010. Public Expenditure after the Global Financial Crisis. In The Day after Tomorrow: A Handbook on the Future of Economic Policy in the Developing World, edited by Otaviano Canuto and Marcelo Guigale, 193206. Washington, DC: World Bank. Chai, Jingqing, Isabel Ortiz, and Xavier R. Sire. 2010. Protecting Salaries of Frontline Teachers and Health Workers. Working Brief 1002, United Nations Childrens Fund (UNICEF). Chinery-Hesse, Mary, Bina Agarwal, Tendai Bare, and Marjorie Lamont Henriques. 1989. Engendering Adjustment for the 1990s. London: Commonwealth Secretariat. Chubrik, Alexander, Marek Dabrowski, Roman Mogilevsky, and Irina Sinitsina. 2011. The Impact of the Global Financial Crisis on Education and Health in the Economies of the Former Soviet Union. CASE Network Reports 100, Center for Social and Economic Research (CASE). Coady, David, Margaret Grosh, and Josh Hoddinott. 2004. Targeting Outcomes Redux. World Bank Research Observer 19(1): 6185. Coady, David, Robert Gillingham, Rolando Ossowski, John Piotrowski, Shamsuddin Tareq, and Justin Tyson. 2010. Petroleum Product Subsidies: Costly, Inequitable, and Rising. Staff Position Note 10/05, International Monetary Fund (IMF). Cornia, Giovanni Andrea, Richard Jolly, and Frances Stewart, eds. 1987. Adjustment with a Human Face. Oxford: Clarendon Press. Coulombe, Harold and Jingqing Chai. 2010. Multi-Dimensional Poverty Map: An Illustration Using Mongolia Census Data. Social and Economic Policy Working Paper, UNICEF.

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Dermott, C. John and Robert F. Wescott. 1996. Fiscal Reforms That Work. Economic Issues 4. Washington, DC: IMF. Food and Agricultural Organization of the United Nations (FAO). 2013. FAO Food Price Index. http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/. Gorman, Mark. 2004. Age and Security: How Social Pensions Can Deliver Effective Aid to Poor Older People and Their Families. London: HelpAge International. Hicks, Norman L. 1991. Expenditure Reductions in Developing Countries Revisited. Journal of International Development 3(1): 2937. International Monetary Fund (IMF). 2010a. Regional Economic Outlook: Asia and Pacic Leading the Global Recovery: Rebalancing for the Medium Term. Washington, DC: IMF. . 2010b. Strategies for Fiscal Consolidation in the Post-Crisis World. IMF Policy Paper. . 2010c. Exiting from Crisis Intervention Policies. IMF Policy Paper. . 2011a. World Economic Outlook: Tensions from the Two-Speed Recovery Unemployment, Commodities, and Capital Flows. Washington, DC: IMF. http://www.imf.org/external/ pubs/ft/weo/2011/01/weodata/download.aspx. . 2011b. Gabon: 2010 Article IV Consultation Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Gabon. IMF Country Report 11/97. . 2011c. Burundi: Sixth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Requests for Extension of the Arrangement and Augmentation of Access Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Burundi. IMF Country Report 11/199. Kyrili, Katerina and Matthew Martin. 2010. The Impact of the Global Economic Crisis on the Budgets of Low-Income Countries. Oxford: Oxfam International. Mapson, Anna. 2011. Cutting Women Out in Bristol: Impact Assessment of the Public Spending Cuts on Women in Bristol. Bristol: Fawcett Society Bristol Local Group. McKinley, Terry. 2010. Has the IMF Abandoned Neoliberalism? Development Viewpoint 51, Centre for Development Policy and Research (CDPR), School of Oriental and African Studies, University of London. Mkandawire, Thandika. 2005. Targeting and Universalism in Poverty Reduction. Social Policy and Development Programme Paper 23, United Nations Research Institute for Social Development (UNRISD). Molina-Gallart, Nria. 2010. Bail-out or Blow-out? IMF Policy Advice and Conditions for Low-Income Countries at a Time of Crisis. Brussels: European Network on Debt and Development (EURODAD). Ortiz, Isabel, Jingqing Chai, and Matthew Cummins. 2011a. Austerity Measures Threaten Children and Poor Households: Recent Evidence in Public Expenditures from 128 Developing Countries. Social and Economic Policy Working Paper, UNICEF. . 2011b. Escalating Food Prices: The Threat to Poor Households and Policies to Safeguard a Recovery for All. Social and Economic Policy Working Paper, UNICEF. . 2011c. Identifying Fiscal Space: Options for Social and Economic Development for Children and Poor Households in 184 Countries. Social and Economic Policy Working Paper, UNICEF. Ortiz, Isabel, Jingqing Chai, Matthew Cummins, and Gabriel Vergara. 2010. Prioritizing Expenditures for a Recovery for All: A Rapid Review of Public Expenditures in 126 Developing Countries. Social and Economic Policy Working Paper, UNICEF. Palitza, Kristin. 2009. HEALTH-AFRICA: Global Financial Crisis Leads to HIV Budget Cuts. Inter Press Service News Agency, May 18.

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Paxson, Christina and Norbert Schady. 2007. Cognitive Development among Young Children in Ecuador: The Roles of Wealth, Health, and Parenting. Journal of Human Resources 42(1): 4984. Pollin, Robert, Gerald Epstein, and James Heintz. 2008. Pro-Growth Alternatives for Monetary and Financial Policies in Sub-Saharan Africa. Policy Research Brief 6, International Poverty Centre, United Nations Development Programme (UNDP). Ravallion, Martin. 1999. Is More Targeting Consistent with Less Spending? International Tax and Public Finance 6(3): 41119. . 2002. Are the Poor Protected from Budget Cuts? Evidence for Argentina. Journal of Applied Economics 5(1): 95121. Seguino, Stephanie. 2010. The Global Economic Crisis, Its Gender and Ethnic Implications, and Policy Responses. Gender and Development 18(2): 17999. Srivastava, Pradeep. 2004. Poverty Targeting in Asia: Country Experience of India. Asian Development Bank Institute Discussion Paper 5. UK Womens Budget Group. 2010. A Gender Impact Assessment of the Coalition Government Budget. UK Womens Budget Group. United Nations Educational, Scientic and Cultural Organization (UNESCO). 2010. The Hidden Crisis: Armed Conict and Education. Education for All Global Monitoring Report. Paris: UNESCO. Van Waeyenberge, Elisa, Hannah Bargawi, and Terry McKinley. 2010. Standing in the Way of Development? A Critical Survey of the IMFs Crisis Response in Low-Income Countries. Penang, Malaysia: Third World Network. Willem te Velde, Dirk, Charles Ackah, Olu Ajakaiye, Ernest Aryeetey, Debapriya Bhattacharya, Massimiliano Cal, Tayo Fakiyesi, et al. 2009. The Global Financial Crisis and Developing Countries: Synthesis of the Findings of 10 Country Case Studies. Working Paper 306, Overseas Development Institute (ODI). Weeks, John and Terry McKinley. 2007. The Macroeconomic Implications of MDGBased Strategies in Sub-Saharan Africa. Policy Research Brief 4, International Poverty Centre, UNDP. World Bank. 2012. World Development Indicators (WDI). http://databank.worldbank. org/ddp/home.do?Step=12&id=4&CNO=2. Yang, Yongzheng, Paolo Dudine, Nkunke Mwase, Sibabrata Das, Eteri Kvintradze, and Pritha Mitra. 2010. Creating Policy Space in Low-Income Countries during the Recent Crises. Washington, DC: IMF.

NOTES ON CONTRIBUTORS Isabel Ortiz is Associate Director of Policy and Practice at UNICEF. She has over twenty years of experience working in more than thirty countries in various areas of social and economic development. From 2005 to 2009 she was Senior Advisor at the United Nations Department of Economic and Social Affairs (UNDESA), and from 1995 to 2003, at the Asian Development Bank, where she was founding member of its Poverty Reduction Unit. Earlier she worked in academia in Spain. With a PhD from the London School of Economics, Dr Ortiz has written over forty-ve publications translated in several languages. Matthew Cummins is Social Policy and Economic Specialist at UNICEF. He leads research and advises country ofces on designing policies 77

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to protect children and poor households from the adverse impacts of macroeconomic shocks as well as on real-time monitoring, scal space and social budgeting issues. He has worked on social policy issues for more than ten years with the Inter-American Development Bank, United Nations Development Programme, US Peace Corps, and the World Bank. He holds an MA in International Economics from Johns Hopkins School of Advanced International Studies and has published widely in international development books and journals.

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Appendix Table 1 Selected adjustment measures commonly considered, 201011

Wage bill cuts or caps (n = 56) Reduce or eliminate subsidies (n = 56) Algeria Angola Belarus Bolivia Burkina Faso Burundi Cameroon Cape Verde Central African Rep. Congo, Dem. Rep. Dominican Rep. Egypt El Salvador Fiji Gabon Ghana Grenada Guinea-Bissau Haiti Honduras India Indonesia Iran Iraq Jordan Kiribati Kosovo Lesotho Liberia Macedonia Malaysia Maldives Mali Mauritius Mexico Mozambique Further target social protection (n = 34) Algeria Antigua and Barbuda Belarus Bolivia Bosnia and Herzegovina Bulgaria Cambodia Dominica Egypt El Salvador Fiji Grenada India Indonesia Jordan Kazakhstan Lebanon Malaysia Mauritania Mauritius Moldova Mongolia Mozambique Nepal Nicaragua Paraguay Peru Philippines Romania Russia St. Kitts and Nevis Sudan Timor-Leste Tunisia Old-age pension reform (n = 28)

Algeria Antigua and Barbuda Belarus Belize Benin Bosnia and Herzegovina Botswana Bulgaria Burkina Faso Burundi Cambodia Chad Chile Costa Rica Cte dIvoire Djibouti Fiji Gabon Grenada Guinea-Bissau Haiti Honduras India Jamaica Jordan Kazakhstan Kiribati Lebanon Lithuania Macedonia Maldives Marshall Islands Micronesia Moldova Montenegro Mozambique Nicaragua

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Albania Antigua and Barbuda Belarus Belize Benin Bosnia and Herzegovina Bulgaria Egypt Guyana Honduras India Jamaica Jordan Lebanon Lithuania Mali Mexico Micronesia Montenegro Nicaragua Romania Russia Serbia St. Kitts and Nevis St. Lucia Tunisia Turkey Ukraine

(Continued )

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Appendix Table 1 Continued

Wage bill cuts or caps (n = 56) Reduce or eliminate subsidies (n = 56) Nepal Nicaragua Nigeria Pakistan Palau Philippines Romania Serbia Sierra Leone St. Kitts and Nevis Sudan Suriname Tanzania Thailand Timor-Leste Togo Tunisia Tuvalu Ukraine Yemen Increase or introduce subsidies (n = 10) Bangladesh Georgia Liberia Mali Mauritania Mozambique Nicaragua South Africa Togo Zambia Expand social protection (n = 22) Antigua and Barbuda Armenia Bolivia Burundi China Dominican Rep. Fiji Guyana Haiti Indonesia Introduce/expand old-age pensions (n = 16) Bolivia China El Salvador Georgia Guyana Kosovo Kyrgyz Republic Macedonia Mongolia Mozambique Panama Seychelles Further target social protection (n = 34) Old-age pension reform (n = 28)

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Nigeria Palau Romania Samoa Serbia Solomon Islands South Africa St. Kitts and Nevis St. Lucia Swaziland Tajikistan Tanzania Timor-Leste Tonga Tunisia Tuvalu Ukraine Vanuatu Yemen

Increase wage bill (n = 23)

Benin Bhutan Bolivia Cameroon Central African Rep. China Dominican Rep. El Salvador Equatorial Guinea Haiti

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Appendix Table 1 Continued

Increase wage bill (n = 23) Increase or introduce subsidies (n = 10) Expand social protection (n = 22) Iran Iraq Kenya Kyrgyz Republic Mauritania Mozambique Panama Philippines Senegal St. Kitts and Nevis Sudan Ukraine Introduce/expand old-age pensions (n = 16) Sudan Tajikistan Turkey Zimbabwe

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Kosovo Kyrgyz Republic Lao PDR Lesotho Mongolia Namibia Niger Panama Philippines Russia Suriname Uruguay Zimbabwe

Source : Authors analysis of 124 IMF country reports published from January 2010 to September 2011 (for details, see Ortiz et al. [2011a]).

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