Where is the Fiscal Space for Children?
Economic, social & political shocks in Asia and Pacific are impacting country prioritization of social sector budgets. UNICEF and the European Union join forces to call for protecting public investment for children.
The current economic, social and political shocks that are affecting Asia and the Pacific, coupled with the climate crisis, pose significant threats to the progress made in the past 30 years. Recovery from the impact of the COVID-19 pandemic has been slow and often asymmetric, both within and among countries in the region.
The European Union and UNICEF have joined forces to analyse the state of fiscal space for children in all sectors that touch their lives. The EU and its Member States are one of the largest donors of humanitarian aid and the biggest donor for international development aid in the world, providing around 50% of official development assistance to help overcome poverty and advance global development. The EU-UNICEF Public Finance Facility in South Asia and Southeast Asia is a solution-oriented instrument that supports governments’ policy and fiscal decisions in seven countries to accelerate human development outcomes.
Our analysis of budget trends in the education, health and social assistance sectors indicates gaps that already existed before the pandemic. These appear to have now further deteriorated, as highlighted in the latest regional report Where is the fiscal space for children? Review of social sector budgets in selected countries in South Asia, East Asia and the Pacific Islands.
In education, the regional report shows that learning targets are not being met and barriers to equitable access persist, with nearly 45 per cent of students in half of the countries still not meeting the minimum reading proficiency level at the end of primary school. Region-wide, data points to a possible disinvestment in education because of COVID-19. If unaddressed, this will result in long-term human capital loss. Governments need to unlock financing to promote educational equity and ensure learning for all children.
Progress was made in maternal, new-born and child health, however countries still experience disruptions in health services resulting from the closures and lockdowns during COVID, affecting routine immunization and other essential services. The high prevalence of the triple burden of malnutrition across Asia and the Pacific continues to challenge children’s survival and development. Health budgets, overall, remained a priority as part of the government budget during the pandemic, yet far less than the recommended 15 percent of the total government budget. Governments need to continue to protect investments in primary healthcare and explore opportunities for efficiency gains in the sector, with an emphasis on equity at the expenditure level.
Very large shares of populations continue to be excluded from social protection, despite the expansion of coverage during the pandemic. Tax-financed social assistance schemes are not addressing the inequities affecting children. Social assistance initially increased at the peak of the pandemic, followed by a decrease in investment. Ensuring the sustainability of schemes adopted during COVID-19, especially schemes at risk of de-investment, should remain a priority in Asia and the Pacific.
The combination of declining or stalled government revenues, rising debt stress, health emergencies, natural disasters and civil unrest will continue to exert pressure on the fiscal priorities of countries in Asia Pacific, while the global economic repercussions of the war in Ukraine are forcing them to face difficult trade-offs between containing inflation or safeguarding recovery, protecting the poor or building financial buffers.
Hence, increasing the efficiency and equity of the health, education and social protection spending in Asia and the Pacific should be a high priority in the years to come; this needs to be accompanied by reforms in public finance management systems, such as improved monitoring of budget data and increased credibility of social sector budgets.
Re-prioritizing the social sectors has the potential to yield positive developmental outcomes and well-being for all citizens, including children, and particularly those living in poverty. In the long run, investment in social services and programmes will reduce poverty and address income inequality, boost human capital development and enhance the potential for economic growth.
The European Union and UNICEF remain committed to leaving no one behind.