The International Monetary Fund (IMF) has been advised to focus on the impact of social protection programmes and not only their cost in its new framework for social protection.
The recommendation from the Global Coalition for Social Protection Floors comes as the Fund deliberates a new institutional view on social protection prompted by criticism from its own Independent Evaluation Office and others.
The IEO’s 18-month investigation found that the IMF issues loan conditions and recommendations based on a consideration of the cost of social protection, not its impact on poverty or inequality. Following on from this, the Coalition’s submission to the IMF offers considerations for the development of the institutional view. This document urges the Fund to support countries to mobilise adequate resources for social protection floors.
Furthermore, the Coalition’s submission underlines that the IMF has recommended poverty-targeting even though it had underestimated the complexity of doing so, and in contexts where it had acknowledged a lack of necessary capacity. It cites Development Pathways’ evidence that poverty-targeting leads to low transfers and coverage, and therefore less impact on poverty. And it also points to the fact that the Fund acknowledged Tunisia spent significantly less than permitted under a loan because of issues with delivering poverty-targeting.
Drawn up by Peter Bakvis of the International Trade Union Confederation, Miriam Brett of the Bretton Woods Project and Barry Herman of Social Justice in Global Development, the submission urges more meaningful and successful social spending targets. The authors welcome the fact that the IMF included a social protection floor as a performance criterion in its largest ever loan, to Argentina, last year. However, they note the loan agreement only allowed the nation to breach a deficit limit with spending on some benefits, and only if these together did not exceed a maximum of 0.2% of GDP, which they stress is a “very small amount”.
“The appropriate focus of the IMF in the realm of social protection is in protecting its financing. We call for strengthening the Fund’s effectiveness in helping countries to identify and mobilise adequate resources for their social protection floors and in protecting these floors as inviolable,” the submission says.
“In its new framework on social protection policy, the IMF should adopt an approach that is consistent with and supportive of the scope and objectives of social protection as defined by the international community, notably in the SDGs,” the document concludes.
The full document from the Global Coalition can be accessed by clicking here.