Today we are releasing new analysis which suggests that planned investment in children’s health, education and wellbeing in countries across the world will not be enough to mitigate the severe impacts of the COVID crisis on their lives. We’re releasing the research today to coincide with the Annual Meetings of the International Monetary Fund (IMF) and the World Bank. Being held virtually in the middle of a global pandemic, the tone of this year’s Meetings is considerably more sombre than last year, when everyone was looking forward to making the 2020s a “decade of delivery” for the Sustainable Development Goals (SDGs) One year later, we are teetering on the brink of unprecedented reversals in human development. Hard-won advances in human capital built up over decades could be lost and there is a real and present danger that the 2020s will go down in history as a ‘lost decade’.
Since the onset of the COVID-19 pandemic, governments around the world have been working to protect economies, livelihoods and the wellbeing of their citizens. But the needs are of course huge. While the full impact of the pandemic on children is still unclear, early estimates suggest that it has already resulted in an additional 150 million additional children being severely deprived in their access to health, education, nutrition, water and sanitation and housing services. This is extremely worrying – not only as children’s rights are being violated, but because we know that wellbeing in childhood is an investment in future social and economic prosperity.
The COVID crisis hasn’t yet decreased spending on health, education and social protection…
In comparison to high-income countries, low- and lower middle-income countries entered the COVID crisis with fewer resources and less fiscal space to respond. However, our analysis shows that these countries have responded decisively. Overview data reveals that, on the whole, they have managed to maintain or even increase overall spending levels in 2020, supported by the international community. But to really understand the impacts on children, we need to look at whether governments are prioritising key areas including education, health, nutrition and social protection to support children who have been most impacted, particularly the poorest and most marginalised.
To understand better how governments have adjusted their spending during the crisis, we analysed published budget data for nine countries, which either started a new budget cycle or revised an existing budget after April 2020. Positively, we find that spending on social sectors has been maintained or even increased, despite the fiscal pressure most countries are currently feeling. While education spending has been mostly maintained at previous levels, we see increased spending in health care and social protection.
…But there are challenges ahead
The issue now is whether current levels of social spending can continue into 2021, given that the crisis is becoming more protracted. A lot of the additional breathing space for social spending in 2020 has been created by large increases in borrowing, which further reduces countries’ debt sustainability and narrows fiscal space in the medium term. Moreover, to achieve the SDGs by 2030, significant increases in social spending will be required; maintenance of existing levels will not be sufficient.
On this, our new analysis paints a worrying picture. In governments’ current plans, overall levels of spending are set only to be maintained relative to economic growth up to 2025. This suggests that any increases in revenue from economic growth are set be used to reduce budget deficits and attempt to bring levels of debt back under control, rather than to invest in children and achieve the SDGs. In the small sample of countries that have presented data, social sector spending under scenarios of high post-recovery growth and increased revenue mobilisation will not increase, and remain significantly short of what is required to finance attainment of the SDGs.
Looking ahead
Given the challenging short- and medium-term outlook on whether financing for education, health and social protection will be sufficient to meet the SDGs, it is essential that funding is used in efficient and effective ways to maximise outcomes for children. National governments should continue to prioritise social spending in 2021 and look to secure financing for the budget through concessional means where possible. In the recovery phase, an enabling environment for inclusive and green economic recovery and increasing revenue mobilisation will be crucial for livelihoods and expanding fiscal space to increase social spending. And finally, governments should consider the efficiency, effectiveness and equity allocation of government spending, to maximise progress towards the SDGs, advance gender equality, and to ensure that the most deprived and marginalised children are not left behind.
Bilateral and multilateral development partners should provide critical budgetary support to low- and lower middle-income countries, through grants and highly concessional lending, such as increased IDA disbursements, enhanced IMF programme support, and expanded debt relief. In doing so, they should prioritise sector-specific support towards education, health, nutrition, child protection and social protection.
As Finance Ministers and development partners convene at the IMF/World Bank Annual Meetings, they must refrain from playing politics with children’s futures, and think about the impacts that seemingly technical decisions will have on children’s day to day lives. One proposal on the table for discussion at the Meetings is for a supplementary International Development Association (IDA) budget which would help to give some of the world’s lowest income countries funding they urgently need for investment in children. Another is to extend and strengthen the Debt Service Suspension Initiative so that countries are not forced to choose between investing in children and paying off debts. Neither of these proposals are done deals, but they should be – before it’s too late to transform the 2020s from a “lost decade” back into a “decade of delivery” for children.
Read more in our new briefing "Financing social spending in times of COVID-19".
