- To offset the impact of the crisis on the poor in 2009, the
IMF-supported program accommodated approximately 1.5 percent of
GDP of emergency spending on targeted social safety nets.
- In response to the food and fuel shock in 2011, the IMF’s
Executive Board approved higher financing in the amount of 0.5
percent of GDP to mitigate the impact of the shock on the
country’s public finances.
- The program also included higher spending on social safety
net programs targeted at the most vulnerable groups, in the
amount of 0.7 percent of GDP.
- As part of the IMF-supported program, the government has
expanded targeted programs such as cash transfers to orphans and
other vulnerable children (OVCs), as well as elderly and other
vulnerable people. As a result, the proportion of eligible OVCs
receiving cash transfers increased from 1 percent in 2007 to
15.6 percent in FY 2010/11. Over the same period, the number of
eligible households with vulnerable persons receiving cash
transfers increased from 200 to 33,000.
- Under the IMF-supported program, the government revamped its
social protection programs in 2011 and increased its budget
allocation to social protection for 2012 by one third.
- Mozambique is piloting the UN’s “Social Protection Floor
Initiative,” which started in 2011. Under this initiative, the
IMF provided analysis of available fiscal space while the ILO
and UNICEF offered technical expertise on social protection
- To leverage fiscal space in designing sustainable social
protection schemes consistent with the 2011–14 poverty reduction
strategy, the current IMF-program includes a quarterly
indicative target floor on priority spending reflecting half of
- The IMF-supported program, approved in late 2008, introduced
a cash transfer scheme which aims to protect the most vulnerable
segments of the population by replacing untargeted universal
- In 2012, the government plans to revert to means-tested cash
transfers, which are expected to increase by about 0.4 percent
Asia and Pacific
- Despite significant budget cuts in other areas, social
transfers were protected under the 2009 IMF-supported program
and have increased during the past two years.
- In January 2012, the parliament passed a social transfer
reform law introducing a targeted poverty benefit that will
strengthen the social safety net and increase the resources
available to protect the poorest segments of the population.
- The IMF-supported program recognizes the need to scale up
critical social spending on infrastructure, health, and
education to achieve inclusive growth.
- The government remains committed to keep spending on health
and education at no less than 32 percent of government-funded
recurrent expenditure and to improve the quality of spending by
strengthening public financial management and procurement.
- The IMF-supported program focused on preventing a currency
crisis that would have been catastrophic, especially for the
poorest and most vulnerable segments of the population.
- The program aimed to ensure that the peace dividend
generated resources to help the country’s most vulnerable
groups, including population in the North and East (the areas
worst affected by the civil war).
- Since the beginning of the program, non security-related
spending has increased significantly, both in absolute terms and
as a share of total government spending. Resources previously
allocated to military spending have been redeployed towards
reconstruction activities, including demining, basic
infrastructure, and other activities essential to the
reintegration of populations displaced by the civil war.
- In 2009, the government increased allowances for housing
assistance for families with 3 or more children, noncash housing
subsidies for low-income families, and unemployment assistance.
- The 2010 budget doubled targeted social assistance, as the
government reformed this program to widen its scope and increase
the average assistance for poor households. The government plans
to improve effectiveness of targeted social assistance in view
of restructuring and possible privatization of state-owned
|Bosnia and Herzegovina
- The IMF-supported program aims to cushion the aftershocks of
the global economic crisis and of the fiscal adjustment on
vulnerable groups by avoiding cuts to pensions and reforming the
social safety net.
- The rights-based benefits system is being overhauled with
help from the World Bank to improve targeting and prevent abuses
of eligibility criteria.
- A rapid increase in social spending has been one of the main
drivers behind the large deficits accumulated before the crisis.
Since 2000, social security spending in Greece has increased by
about 6 percent of GDP and has reached one of the highest levels
in the EU. Cuts to social spending, including pensions, are
- To minimize the impact on the most vulnerable groups,
pension cuts will be borne mostly by the highest pension
recipients and those receiving supplemental pensions. The
government has also committed to reviewing other social benefit
programs, which are unequally distributed and poorly
targeted—for instance, 60 percent of all family benefits go to
the 40 percent with the highest incomes.
- The IMF-supported program, which expired in October 2010,
aimed at macroeconomic stabilization and helped protect the poor
and low-income earners from the impact of the global crisis.
Specifically, mortgage borrowers benefitted from currency
stabilization, and a banking crisis was avoided.
- Despite the nominal freeze of the public sector wages, a
top-up payment scheme contingent on real growth was introduced
to preserve the purchasing power of low-income civil servants.
- Targeted support schemes were introduced to protect the poor
from the abolition of selected universal transfers and subsidies
(including housing and energy); disability benefits were
increased for the poor disabled people.
- A support scheme was introduced to provide temporary relief
on mortgage payments for unemployed people and families facing
significant increases in payments (either due to income loss or
increase in loan payments on foreign-exchange denominated
- The 2010 and 2011 budgets—while entailing expenditure cuts
in some areas—have added new programs to deal with specific
issues (for example, youth unemployment and overly indebted
- Engagement with social partners and consensus building have
facilitated agreements on key budget issues, including a
framework for household debt workouts and the recently concluded
tripartite stability pact, which entailed a substantial increase
in social benefits.
- The government implemented a comprehensive strategy to
improve the social safety net at an estimated cost of
0.5 percent of GDP in 2011.
- The guaranteed minimum income, allocated to families, has
been increased by 8 percent for adults and by 22 percent for
children. If the income of the family is below the subsistence
level, the family gets a cash transfer equal to the difference
between the sum of the subsistence levels and the actual family
- Health copayments have been abolished for poor people.
- Increased funds have been made available for emergency
housing support for low-income households.
- The IMF has also encouraged the government to implement a
public works program, financed by the European Social Fund, to
give jobs to people who wanted to work but were unable to find
- Under the IMF-supported program, overall social assistance
has increased by RON 9.8 billion (1.9 percent of GDP) in 2009
and RON 4.7 billion in 2010 (about 1 percent of GDP). Measures
included limiting gas price increases and minimizing the impact
of heating price increases on vulnerable households.
- Under the IMF-supported program, the threshold for maximum
utility costs as a percent of income for working families was
lowered, starting in 2011, from 20 to 15 percent, and from 15 to
10 percent for pensioners. Amounts above this are covered by the
state budget. This is expected to protect some
800,000 households (about 5 percent of all households).
- The government is undertaking a review of all existing
social programs, in consultation with the World Bank, with a
view to improve their targeting and effectiveness. This should
help make more resources available to protect more poor
- Under the IMF-supported program, the government used
available fiscal space to increase spending on education, health
and social protection.
- Social spending increased by over 3 percentage points of GDP
in 2009 and 2010, despite a substantial decline in revenues.
- The IMF-supported program made it possible to increase the
conditional cash transfer program (Solidaridad) by an additional
70,000 families in 2009. This amounts to over 10 percent of the
population living in conditions of extreme poverty, and it has
increased the coverage of the program to about 85 percent of the
- There has also been an increase in the coverage of poor
families under the targeted electricity subsidy program (known
as Bonoluz), from 50,000 in December 2010 to 250,000 by
end-2011.The government also plans a further extension of the
conditional cash transfer program by 60,000 additional families
to total of 590,000.
- The government is committed to increase social spending
(mostly on education and health) by 0.75 percent of GDP a year
during 2010–12 (something that has proven a challenge in 2010
and 2011 because of the fiscal consequences of the oil shock).
- Under the IMF-supported program, subsidies (transportation,
water, electricity, and liquefied propane gas) have been
targeted to low-income households, with savings (amounting to
0.4 percent of GDP) used to broaden health services in
low-income areas, provide uniforms and meals to school children,
and expand conditional cash transfers.
- To strengthen the social safety net, the minimum pension has
been raised to the same level as the minimum wage.
- Social spending increased from 4.4 percent of GDP in 2008 to
5.7 percent in 2010 under the IMF-supported program.
- The government’s social protection policy focused on
enhancing existing programs to offset the effect of the global
and economic crisis on the poorest segments of the population.
- A key conditional cash transfer program that was initiated
in 2008 (known as Mi familia progresa) was expanded to
reach 0.3 percent of GDP in 2010 (from less than 0.1 percent of
GDP in 2008).
- Despite the overall need for fiscal consolidation, the
IMF-supported program (approved in February 2010) was designed
to help mitigate the impact of economic adjustment on the most
vulnerable groups in society through meaningful increases in
social spending for targeted programs.
- Spending on well-targeted social assistance programs reached
0.3 percent of GDP in the fiscal year 2010–11, and has been
maintained in 2011–12. This includes the school nutrition
program and the cash transfer program known as Advancement
through Health and Education.
Middle East and Central Asia
- The IMF-supported program establishes a macroeconomic
framework that promotes inclusive growth, human development, and
economic stability as foreign troops withdraw from Afghanistan.
- It establishes a floor on social and pro-poor spending,
which is identified in the budget in accordance with the
country’s poverty reduction strategy and a poverty profile
developed by the government of Afghanistan. The floor is set at
$370 million for FY2011/12 and at $400 million for FY2012/13.
- Under the IMF-supported program, social spending increased
from 5.8 percent of GDP in 2008 to 6.6 percent of GDP in 2011.
- Looking ahead, the program aims to protect social spending
while at the same time improving the targeting of social safety
nets so more benefits can be offered to eligible families.
- Despite the need for fiscal consolidation, measures have
been introduced under the IMF-supported program to safeguard and
better target social spending. This includes an indicative
target for social spending (about 6 percent of GDP in 2011).
- The health and education ministries are exempted from the
hiring freeze envisaged under the program, and the lowest wages
in the civil service have been increased.
- Subsidies of kerosene, consumed by the most vulnerable
groups, remain intact despite fiscal consolidation.
- Taxes on certain basic food imports were eliminated in 2008.
- The IMF is providing technical assistance to the ministry of
finance to design a diesel subsidy reform program that would
phase out the universal price subsidy and better target
- Under the IMF-supported program, social spending increased
by 13 percent in real terms in 2009-10 (relative to 2008).
- Much of the increase in social spending went initially to
provide assistance to internally displaced persons from the 2008
conflict with Russia, and to broad-based, quick disbursing
programs, such as an increase in basic pensions.
- Even with the gradual phasing out of these initial social
support measures, overall social spending was nearly 5 percent
higher in real terms at the end of the program (in 2011) than it
was in 2008.
- The highest increases in real terms over the whole period
were for spending on health programs (27 percent) and education
- In 2011, during the last year of the program, the government
also provided food and electricity vouchers to alleviate the
impact of rising food and energy prices.
- The IMF-supported program has helped preserve social
spending on education and the public distribution system, which
provides basic staples to every Iraqi household. Education
spending in 2012 is projected to increase by about 50 percent
compared to the 2011 budget.
- Under the IMF-supported program, the Kyrgyz government
raised pensions in 2011, which brought the average pension to
about 85 percent of the minimum subsistence income.
- An increase in wages for teachers and doctors, introduced in
June 2011, helped raise spending on education and healthcare by
more than 0.7 percent of GDP in 2012.
- As part of the upcoming public expenditure review, the IMF
will work with the World Bank to develop policy recommendations
to increase the share of social spending allocated to low-income
and vulnerable segments of the population and improve the
targeting of such spending.
- To preserve social spending, the IMF-supported program sets
a floor target for pro-poor expenditures, which increased by 10
percent in real terms over 2010–11 to about 31 percent of total
- The IMF has helped the government design a temporary
emergency program aimed at mitigating the effects of high food
commodity prices and drought on the most vulnerable. Key
emergency measures include the replenishment of food stocks in
rural areas, free food distribution, and subsidized livestock
- Under the IMF-supported program, ill-targeted and costly
energy subsidies are being replaced by well-targeted social
safety nets. Key reform elements, such as the introduction of a
fuel price smoothing mechanism and a new electricity tariff grid
that preserves lifeline tariffs for the poor, are accompanied by
a new social protection strategy and an expansion of existing
cash transfer schemes.
- Part of the savings generated by the ongoing subsidy reform
will be used to scale up existing targeted safety nets such as
conditional cash transfer schemes and school meal programs.
These efforts will benefit from the results of the ongoing
poverty survey aimed at identifying the neediest population.
- Strengthening the social safety net was a key priority under
the IMF-supported program that expired at the end of September
- Social spending in 2009–10 was significantly higher than in
2008–09, having more than doubled from 0.8 percent to 1.8
percent of total spending.
- The government also provided one-time cash transfers to
households affected by the July 2010 floods in an amount
totaling 0.2 percent of GDP at the federal and provincial
- In September 2010, the IMF provided $451 million (0.2
percent of GDP) in emergency assistance to help those affected
by the floods, especially the poor and the vulnerable groups in
need of food, shelter, and medical assistance.
- The 2011/12 budget targets a 15 percent nominal increase in
cash transfers. An additional $480 million being provided by
donors would bring total cash transfers in 2011/12 to about 0.5
percent of GDP.
- A key pillar of the staff-monitored program that expired at
the end of 2010 was to shield the poor from the impact of the
- Social transfers were maintained in 2009–10, and even in
2011, despite the need for significant budget cuts following the
secession of South Sudan and the subsequent loss of about 75
percent of oil production.
- In January 2011, the government raised the price of some
fuel products and sugar and introduced social safety measures to
mitigate the negative welfare impact of such price increases on
households. These include an across-the-board increase in civil
servants’ and pensioners’ wages and a commitment to provide
targeted support to poor families and students, further
transfers to the health insurance programs, and additional
resources for agriculture and industry development funds.
- The IMF is also urging the government to ensure that the
increase in capital spending in the 2012 budget be directed to
key social and economic infrastructure, such as health,
education, training, and access to safe water.
- Under the IMF-supported program, the government increased
social spending from 7.3 percent of GDP in 2008 to about
9.0 percent of GDP in 2011, and intends to increase it further
to 9.5 percent of GDP in 2012.
- The increase in social spending over 2009–11 fell partly on
transfers to households to help them deal with the decline in
disposable income on account of a dramatic decline in
remittances inflows during the global crisis.
- The government is working with the World Bank on developing
a targeted cash transfer system to protect the most vulnerable
segments of the population, and has also committed to reforming
the agriculture sector with a view to creating employment
opportunities and raising farmers' income potential.
- One of the key pillars of the IMF-supported program is
fiscal adjustment to create fiscal space for higher social and
- In collaboration with the World Bank, the coverage of a cash
transfer program has been expanded to include an additional
500,000 of the most vulnerable families (bringing total number
of recipient families to 1,500,000) to partially offset the
impact of the lifting the fuel subsides.