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Wednesday, 30 September 2020

Social spending programs in the Middle East are still lagging behind the EM average

Social spending programs in the Middle East and Central Asia are still lagging behind the EM average, despite making “notable progress in recent decades,” which is undermining the region’s human development outcomes, according to an IMF report (pdf). While emerging markets spend an average of 14% of GDP on social support programs, Middle Eastern and Central Asian governments earmark only 10.4% of GDP for the same purpose. This disparity is more concerning when looking at the outcomes from these spending initiatives; it appears that emerging markets are not only spending more, but that their spending has greater efficiency. “Increasing the efficiency of spending in the region to the global frontier could — without any increase in outlays — eliminate one-third of the [human development index] gap,” the report says.

Egypt is among the countries that got props for shoring up its social safety net before the pandemic broke out. While the report does not dive into the details of Egypt’s social spending outlays (and specifically excludes subsidies from its calculations) the Sisi administration has been prioritizing social spending and rolling out programs, such as the Takaful and Karama cash subsidy program — which was introduced in 2015. The report also gives Egypt, Pakistan, and Mauritania brownie points for introducing financial support targeting vulnerable women, saying that continued support for vulnerable groups must be a key priority for governments’ covid-19 response packages.

Egypt’s FY2020-2021 budget shows state spending rising 9% y-o-y, with increases of up to 70% on essential services like education and low income housing. The constitution already requires the country’s budget to have 7% of GDP allocated on education and 3% on healthcare so maybe “boosting the efficiency of spending,” as the report suggests, could help bolster the efficacy of their outcomes.

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