EU-UNICEF Public Finance Facility in South and Southeast Asia
Analysing gaps and opportunities in social spending coverage
In 2019, the EU and UNICEF launched a partnership to establish the Public Finance Facility (PFF) in South and Southeast Asia to support the best possible use of public social sectors’ budgets. The four-year pilot initiative covered seven countries, Cambodia, Lao PDR and Myanmar in Southeast Asia, and Bangladesh, Nepal, Pakistan and Sri Lanka in South Asia.
Notable achievements have been made during the piloting phase, leading to the launch of a second phase of the facility in 2024. While the challenges remain the same, the participating countries have partially shifted covering eight countries during the second phase, the Philippines, Thailand and Viet Nam in Southeast Asia, and Bangladesh, Bhutan, Nepal and Sri Lanka in South Asia.
Challenges
Government budgets are the most important public policy instruments for the realization of the rights and well-being of children, as stipulated in the Convention on the Rights of the Child (CRC). The decisions governments make about how to fund social services are critical to the equitable development of children. If allocations are insufficient, concentrated on better-off groups, or used poorly, all children, and especially the most disadvantaged, risk losing access to services and programmes that enable them to survive and thrive, learn, live free from violence and exploitation and have an equitable chance in life.
Public finance for the social sectors underpins UNICEF and EU programme approaches, guided by the commitments set out in the CRC and the EU Strategy on the Rights of the Child with the goal to reduce poverty, ensure sustainable development, and promote democracy, human rights, and the rule of law across the world.
Public Finance analysis is important to help identify where gaps or vulnerabilities in social spending coverage exist. These gaps might be in the form of governments not spending enough, and in-effective and/or in-efficient spending. Another issue encountered with public spending at times is lack of equitable allocations of funding to sectors. Access to public services can be inequitable, an issue both caused and exacerbated by poor public financial management (PFM) and oversight.
Children are a vulnerable and marginalized population group requiring sufficient and equitable spending for positive and sustainable child outcomes. South and Southeast Asia may have achieved some gain in terms of fiscal space for children to date, but countries in both sub-continents still witness challenges linked to the prioritisation of social sectors and the best use of public expenditure in the sectors which concern children. Additionally, a persistent lack of reliable data on child welfare and social sector spending exists. This gap makes it difficult to assess the effectiveness of current programs and to advocate for necessary reforms.
The COVID-19 pandemic and other crises have increased the projected number of children living in poverty and significantly affected the demand for additional fiscal space for social sectors. Governments struggle to maintain expected levels of public spending in social sectors, while at the same time more people are living in poverty.
Solution
The EU-UNICEF Public Finance Facility in South and Southeast Asia provides a unique opportunity to enhance public financial management systems across the region. By focusing on budget analysis, expenditure tracking, and evidence generation, the initiative aims to improve the effectiveness and efficiency of social sector spending.
The PFF's emphasis on promoting open budgeting processes and public participation promotes transparency and accountability. It can empower communities to hold governments accountable, ensuring that funds are used effectively to support children's rights.
The PFF fosters collaboration among governments, civil society, and international organizations, creating a unified voice for advocating child-focused budgets. This collective effort can influence policy changes and mobilize additional resources for social programs that benefit children.
To increase PFM effectiveness in areas relevant to children, the facility provides technical assistance in three core areas:
- Analysis on budget allocations and expenditure
- Generating evidence
- Promoting transparency
The key sectors supported during the second phase are Education, Early childhood development, Nutrition, Health, WASH and Social Protection (including Disaster Risk Management).
The target groups are governments, including ministries of finance and/or planning, social sector ministries, parliaments and local authorities, as well as civil society organizations that advocate for improved public expenditure for children, and the general public.
While the objectives are common to all countries participating in the initiative, the activities for each country correspond to its specific needs and political context.
Country focus
Bangladesh
In Bangladesh, the PFF focusses on strategies to improve the efficiency and effectiveness of public expenditure for children. The facility supports the Ministry of Finance in analyzing funding for social services and how budgets impact children to guide budget planning by the line ministries. The facility supports out-of-pocket expenditure analysis for social services, reviews government investment in these services, and strengthens stakeholder engagements. By involving citizens, civil society, and policymakers, it makes the budgeting process more transparent and accountable.
Multidimensional Poverty Index for Bangladesh
Bhutan
In Bhutan, the PFF partners with the Ministry of Finance to conduct budget and public expenditure review of sub-national governments, focusing on social services for children. It analyzes gaps between planned and allocated spending, compares sector performance, and assesses whether funding distribution meets the needs of children and vulnerable groups. The goal is to improve the system to better target and address child outcomes.
Social Protection Situation Analysis and Landscaping Assessment Report
Mongolia
In Mongolia, the Public Finance Facility (PFF) aims to strengthen evidence-based decision-making and enhance budget efficiency in social sectors that promote children's well-being. By building government capacity for evidence generation, analysis and child-sensitive budgeting, the facility support seeks to foster more efficient, transparent, and accountable budgeting processes. Another key aspect of this initiative is the introduction of child budget tagging and tracking to improve budget monitoring, ensuring that resources are properly allocated and spent on programs that directly benefit children. This will lead to greater utilization of public finance, more inclusive allocation processes and improved coordination and knowledge-sharing among authorities in the design and implementation of policies related to social sector spending on children.
Nepal
In Nepal, the PFF examines allocation and spending efficiency in the Education sector at all levels of government. It examines how local and provincial governments raise and use funds to improve budgeting and create more resources. Focus will be put on knowledge generation on key policies and participatory needs-assessments in selected Palikas to understand local needs as well as information sharing with citizens groups, policy makers and parliamentarians.
The Philippines
In the Philippines, the PFF aims to ensure children benefit from improved public financial management by generating evidence to develop policies and promote the use of Programme Convergence Budgets strategy, which improves coordination and performance-based budgeting for programs like early childhood development. Work includes the development of tools like a child budget tagging system to monitor spending and strengthen the capacity of local governments to track, monitor and assess spending more efficiently and effectively. Additionally, the PFF will support policy dialogues under the Open Government Initiative, encouraging greater participation from adolescents.
Sri Lanka
In Sri Lanka, the PFF aims to complement the ongoing PFM reform agenda of the Government to ensure that children benefit from adequate and effective social sector budgets. The PFF aims to improve budget decisions for children based on reliable evidence, such as yearly social sector spending on education, health, nutrition, or early childhood development, and to foster public participation in such processes, for instance through Citizens' Budgets. The programme also builds capacities of partners - including parliamentarians, government officials, civil society organizations - to make the planning, budgeting, and monitoring processes of social sectors at national and subnational levels more evidence-based and participatory and hosts policy dialogues to promote evidence-driven discussions.
Thailand
In Thailand, UNICEF and the EU are collaborating to promote investment in human capital development. The PFF will support the Office of the National Economic and Social Development Council (NESDC) and sectoral ministries in identifying the most critical gaps in Thailand’s human capital formation and accumulation, and the underlying bottlenecks preventing Thailand from achieving its optimal human capital development. The PFF will explore interventions that directly address these bottlenecks, including the public finance strategies for their implementation.
Human Capital Development in Thailand Report
Viet Nam
In Viet Nam, the PFF will work with the Ministry of Agriculture and Rural Development and the Ministry of Finance to improve efficiency in budget execution of Viet Nam’s shock responsive social protection system. The program will focus on identifying challenges in financing adaptive social protection and exploring financial options to support cash transfers during emergencies, caused by climate changes and extreme weather events. Additional focus will be put on capacity building for related stakeholders at both national and sub-national level on effective budget execution to deliver cash transfers in emergencies.
