ABSTRACT
Fiscal austerity has blanketed European and North American headlines since 2010. However, little attention has been paid to the experience of public finances among developing countries during the global economic crisis,1 and even less to how macroeconomic decisions may have affected vulnerable populations. Not only has the developing world been dealing with heightened vulnerabilities due to the earlier and cumulative effects of the food, fuel, and financial shocks starting in 2008, but in many places, public assistance can be the difference between life and death, meaning that
ABSTRACT
KEYWORDS
INTRODUCTION
Fiscal austerity has blanketed European and North American headlines since 2010. However, little attention has been paid to the experience of public finances among developing countries during the global economic crisis,1 and even less to how macroeconomic decisions may have affected vulnerable populations. Not only has the developing world been dealing with heightened vulnerabilities due to the earlier and cumulative effects of the food, fuel, and financial shocks starting in 2008, but in many places, public assistance can be the difference between life and death, meaning that
severe budget cuts could have grave implications for millions of the world’s poorest and most deprived populations. This study aims to fill the void in current global discussions by offering
a framework to understand how austerity measures may be adversely impacting vulnerable groups in developing countries, with a focus on children and women. Such an analysis would ideally be carried out using real-time expenditure data based on ministerial, sectoral, and economic classifications as well as across different levels of government, in order to measure actual changes in pro-poor spending allocations, both nationally and locally, during the global economic crisis. However, comparable, crossnational, and disaggregated social expenditure data were not available at the time of writing (2012) for a large sample of developing countries over the 2008-12 period. To overcome the data limitations, we examine all existing information
sources that allow us to gauge how social assistance and other expenditure decisions may have evolved for a sample of 128 developing countries since 2008. Our examination includes (1) a review of historical evidence from the 1980s and 1990s, to see how social expenditures have fared in environments of general budget contraction; (2) examination of available surveys along with health and education spending estimates from the World Bank, to see whether developing countries were able to boost social assistance to buffer their populations from the initial effects of the crisis during 2008-09; (3) analysis of total government expenditure projections by the International Monetary Fund (IMF), in order to infer how aggregate spending trendsmay have influenced social sector allocations in 2012; and (4) a review of policy discussions and other information contained in IMF country reports, to identify the most common adjustment measures that developing countries considered in 2010-12. The study concludes by discussing the potentially adverse effects of reduced social assistance and specific austerity measures on vulnerable populations, with particular attention to children andwomen.
