## Executive Summary

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### Introduction
- Purpose:
  - Provides an overview of social spending issues country teams may encounter during and in the aftermath of the coronavirus disease (COVID-19) crisis and describes resources available to staff.
  - Based on the Strategy for IMF Engagement on Social Spending (Policy Paper No. 19/016) and FAD crisis-related analytical work, including Special Series on COVID-19 notes.
- Approach:
  - Distinguishes three phases of the COVID-19 crisis and its economic impact—containment, stabilization, and recovery—to highlight relative policy priorities.
  - Duration of each stage is uncertain and country-specific; teams should apply judgment and flexibility.
  - Collaboration with IDIs (International Labour Organization, United Nations Children’s Fund, World Health Organization, World Bank) and attention to governance issues is recommended.
- Macro-criticality framework (three channels to assess whether social spending is macro-critical):
  - Spending adequacy.
  - Spending efficiency.
  - Fiscal sustainability.
- Cross-cutting operational point:
  - FAD is a hub for collaboration and organized seminars with the World Bank on social protection measures; country teams should contact FAD for counterparts.

### Key statistics and global assessment (containment phase)
- By the end of 2020, 170 countries—almost 90 percent of the world—are projected to have lower per-capita income than in 2019.
- More than US$13 trillion in economic stimulus and rescue packages announced as of end-June 2020.

### Containment phase — priorities, guidance, and operational notes
- Priority:
  - Save lives: increase health spending to prevent/mitigate spread and treat infected persons; fund public health measures.
  - Save livelihoods: scale up social protection for elderly, unemployed workers, and food-insecure children (e.g., school meal recipients).
- Focus of social spending:
  - Assess whether social spending is adequate and expand beneficiary coverage where needed.
  - Be attentive to tradeoffs with efficiency (imperfect targeting can be necessary given urgency and administrative constraints).
  - Consider fiscal sustainability (liquidity constraints, debt burdens, potential for revenue mobilization) and administrative capacity.
- IMF financing and operational changes:
  - Emergency financing (RFI and RCF) provides rapid assistance without full programs; access limits under the regular RFI window and the exogenous shocks window of the RCF were temporarily doubled through at least October 2020, and annual access for resources in the GRA and under PRGT arrangements was increased through April 2021.
  - CCRT reformed in April 2020: provides grants to poorest and most vulnerable members to cover IMF debt obligations for an initial phase of six months; fundraising ongoing to extend grant-based debt relief for up to two years.
  - Augmenting or starting UCT-quality programs may be warranted if (i) financing needs exceed emergency financing access limits; (ii) a UCT-quality program is on-track and can be augmented; or (iii) program design/phasing can be adjusted to meet financing needs.
  - Both emergency financing and UCT-quality program requests require staff to prepare a baseline macroeconomic scenario.
- Practical assessment questions for teams:
  - What are the social spending needs and what measures have been taken so far? (Estimate additional cost relative to pre-crisis budget via bottom-up approaches; collaborate with authorities and IDIs.)
  - How will social spending be sustainably financed? (External: IMF, multilateral/regional development banks, bilateral donors — is external financing temporary or permanent? Domestic: drawdown of government deposits, domestic bond issuance, expenditure reallocation/reprioritization.)
  - What actions ensure fiscal transparency, public accountability, and institutional legitimacy? (Procurement and cash transfer implementation vulnerable to corruption.)
  - What is the estimated impact of additional spending on debt and fiscal sustainability? (Identify one-off vs. durable measures; consider sunset clauses and periodic reassessment.)
- What to include in IMF program documents during containment:
  - Staff Report (SR) and program documents (MEFP, LOI, TMU) should reflect staff assessment of COVID-19 social spending needs; level of detail varies by country.
  - Emergency financing (RFI/RCF): SR should report staff assessment of needs, policy measures, estimated fiscal impact and financing sources; LOI should explain targeting and anti-corruption measures; RCF authorities should specify policies to protect the vulnerable.
  - IMF-supported programs (EFF, ECF, SBA, SCF): fiscal targets can be adjusted or met through reprioritization; include contingency plans for higher spending needs or financing shortfalls; consider conditionally calibrated commitments when social spending is critical for program success.
  - Examples for program document content:
    - Health sector adequacy: SR should assess adequacy, report estimated additional fiscal cost and financing sources (World Bank, bilateral donors, WHO, UNICEF), and explain fiscal/debt impact; program documents could include commitments on hiring, PPE procurement, and transparency measures (examples cited: Honduras and Ukraine).
    - Social assistance transfer adequacy: SR should attempt to determine adequacy (e.g., transfers as share of average income of poorest quintile) or coverage (share of poorest quintile covered), report planned measures (payment increases, enrollment of new beneficiaries), and explain financing or time-bounding; MEFP/LOI/TMU could commit to time-bound targets and transparency/review measures (example cited: Benin).

### Stabilization phase — priorities, guidance, and operational notes
- Priority:
  - Continue supporting poor and vulnerable households and mitigate distributional impact, while being mindful of fiscal sustainability.
- Focus:
  - Shift emphasis toward efficiency: evaluate initial crisis responses and adjust targeting and design as needed.
  - Begin to focus on social programs that will hasten recovery.
- Sector focuses:
  - Health sector: transition to a “new normal”; assess reforms for pandemic response capability, cost, fiscal sustainability, and efficiency in consultation with WHO and stakeholders (examples noted: Central African Republic, Chad, Hong Kong SAR).
  - Social protection: expand/adjust measures to improve effectiveness and incorporate lessons learned (examples: Dominican Republic, Finland, Peru); prioritize affordability and inclusion of affected groups (e.g., informal workers).
- Assessment approach:
  - Reassess COVID-19-related social spending before incorporating into baseline macro frameworks; integrate epidemiological and capacity factors.
  - Probe earlier estimates: additional budget resources required during stabilization; which expansions remain necessary; appropriate pace of adjustment (e.g., shift from ICU expansion to testing/contact tracing).
  - Assess financing sustainability and impact on fiscal targets, rules, and debt sustainability; determine available external financing.
  - Identify capacity weaknesses exposed by the crisis (PFM, procurement) and evaluate whether addressing them is macro-critical or critical to program success.
- Distributional analysis:
  - Evidence indicates major epidemics have raised income inequality and hurt employment prospects of those with only basic education while scarcely affecting employment of people with advanced degrees; distributional analysis can inform mitigation and anti-scar effects.
- Program design and conditionality:
  - Reflect assessment in SR and program documents (MEFP/LOI/TMU) with depth varying by country.
  - Quantitative conditionality (PCs or IT floors) on social spending can be included where critical for program success; build from bottom-up realistic estimates and define social spending and COVID-19 related expenditures clearly.
  - Discuss financing of prolonged elevated social spending or pace of retrenchment; include contingency plans if external financing falls short; include off-budget and donor-financed spending in program documents.
  - Structural conditionality: time-sensitive reforms to close gaps in health and social safety nets may be critical; where capacity limits implementation, discuss sequencing for a medium-term reform agenda with authorities and IDIs.
  - Strengthen transparency, accountability, and legitimacy as stabilization allows for more oversight.

### Recovery phase — priorities, guidance, and operational notes
- Priority:
  - Support poor and vulnerable households through recovery; adopt a medium-term perspective to address scarring effects.
- Focus:
  - Incorporate social spending into a well-articulated pandemic recovery plan.
  - Emphasize fiscal sustainability and efficiency, while ensuring adequacy where still needed.
  - Consider targeted measures to poor and vulnerable households or most affected sectors.
- Sectoral considerations:
  - Health sector: scale back crisis-response spending where appropriate but assess whether health spending needs to remain above pre-crisis levels; define the appropriate “new normal” and fiscal implications; explore efficiency gains.
  - Social protection: as labor markets recover, means-tested assistance and unemployment insurance should decline automatically; scale-back of crisis-era structural expansions may be warranted to preserve fiscal sustainability, recognizing political economy constraints; consider active labor market policies (ALMPs) to reduce long-term scarring for low-skilled workers.
  - Education: consider bolstering budgets to address lockdown-related learning loss, which disproportionately affected students from poor and vulnerable households.
- Engagement approach:
  - Center engagement on a pandemic recovery plan that may include reforms to strengthen social spending systems (improved identification and delivery systems).
  - Collaborate with IDIs and utilize IMF technical assistance to ensure plans meet country needs and enhance resilience, including macro-critical preparedness measures.
  - Refer to the Strategy for IMF Engagement on Social Spending for guidance on surveillance and program engagement.

### Annex I — Focus and program engagement summary by phase
- Containment:
  - Immediate priority to scale up health and social protection to save lives and livelihoods; accept potential efficiency tradeoffs for urgency; advice consistent with realistic financing possibilities.
  - Program notes: RCF/RFI require quantification of needs, fiscal impact, financing sources, governance and sustainability reporting; EFF/ECF/SBA/SCF require contingency plans and may include social spending conditionality.
- Stabilization:
  - Continue support for poor and vulnerable households; increase focus on efficiency and transition to new normal; reassess financing sustainability and capacity weaknesses.
  - Program notes: for EFF/ECF/SBA/SCF, take stock of containment lessons, build recovery-focused measures, include quantitative and structural conditionality if critical.
- Recovery:
  - Sustain support through recovery with medium-term perspective; consider measures to accelerate recovery (ALMPs, education); focus on fiscal sustainability and efficiency.
  - Program notes: integrate social spending into baseline pandemic recovery plans; include quantitative and structural conditionality if critical; depth of analysis and conditionality reflect country circumstances.

*International Monetary Fund | September 2020*

### Executive Summary ������������������������������������������������������������������������������������������������������

### Executive Summary

### Introduction
- This note provides an overview of social spending issues that country teams may encounter during and in the aftermath of the coronavirus disease (COVID-19) crisis and describes resources available to staff.
- The note is based on the Strategy for IMF Engagement on Social Spending (Policy Paper No. 19/016).
- It also draws on the IMF Fiscal Affairs Department’s (FAD) crisis-related analytical work, including notes on fiscal issues in the Special Series on COVID-19.
- The approach to social spending issues will differ over the various stages of the crisis and will depend on country-specific factors and circumstances.
- With the onset of the COVID-19 crisis, social spending is now at the forefront of the IMF’s country work.
- The note distinguishes three phases of the COVID-19 crisis and its economic impact—containment, stabilization, and recovery—to highlight the relative policy priorities at different junctures of the crisis.
- The duration of each stage is inherently uncertain, and countries are likely to reach each stage at different times. Teams should use judgment and flexibility to decide which stage is applicable to their country at a given point in time.
- Collaboration with international development institutions involved in health and social protection (including the International Labour Organization, the United Nations Children’s Fund, the World Health Organization, and the World Bank) could provide valuable insights to inform staff’s assessment.
- Teams should also be mindful of governance issues.
- Footnote: This note is not intended as the Staff Guidance Note for the Strategy for IMF Engagement on Social Spending, which is forthcoming but has been delayed due to the ongoing COVID-19 crisis.

### Containment Phase
- Priority: safeguard lives and livelihoods.
- Focus of social spending:
  - Assess whether social spending is adequate.
  - Be attentive to tradeoffs with efficiency.

### Stabilization Phase
- Priority: continue to support poor and vulnerable households and mitigate the distributional impact of the crisis, while being mindful of fiscal sustainability.
- Focus of social spending:
  - Begin to focus on social programs that will hasten the recovery.

### Recovery Phase
- Priority: support poor and vulnerable households.
- Focus of social spending:
  - Incorporate social spending issues into a well-articulated pandemic recovery plan.
  - Adopt a medium-term perspective to effectively address the scarring effects of the crisis.
  - The focus on fiscal sustainability and efficiency issues may need to increase.

### Stakeholder Engagement and Governance
- Collaboration with: International Labour Organization, United Nations Children’s Fund, World Health Organization, World Bank.
- Teams should be mindful of governance issues when assessing and designing social spending responses.

*International Monetary Fund | September 2020*

### Introduction

### Introduction

### Context and purpose
- IMF launched its Strategy for IMF Engagement on Social Spending in June 2019, which:
  - Provided a definition of social spending (social protection, education services, health services).
  - Clarified when and how to engage on social spending, including in program contexts.
  - Identified internal resources and measures to strengthen external communications and country-level engagement with IDIs and other stakeholders.
  - Emphasized engagement guided by an assessment of the macro-criticality of a specific social spending issue in surveillance and consideration in a program context, and by the existence of in-house expertise.
- This note aims to provide country teams with actionable advice and resources on applying the 2019 strategy during and after the COVID-19 crisis, with country-specific judgment and flexibility.
- Collaboration with development partners (ILO, UNICEF, WHO, World Bank) and civil society should be sought where feasible to inform staff assessments and complement in-house resources. FAD is acting as a hub for strengthening collaboration.

### Macro-criticality framework
- Three channels through which social spending may be macro-critical:
  - Spending adequacy
  - Spending efficiency
  - Fiscal sustainability
- Assessment of macro-criticality often requires joint consideration of multiple channels and trade-offs. All three channels should be considered at all times, though relative importance will change over time and across crisis phases.

### Phases of the COVID-19 crisis (as used in this note)
- The note distinguishes three phases—containment, stabilization, and recovery—applicable in surveillance and program contexts. Durations are uncertain and vary across countries.
  - Containment:
    - Most acute stage with tightest containment measures; restricts economic activity and may effectively shut down economies.
    - IMF focus: supporting members to contain humanitarian and immediate economic fallout.
    - IMF financing: mainly emergency financing with no ex-post conditionality.
  - Stabilization:
    - Acute stage tapers off; economies start to reopen at different paces; additional waves remain a possibility.
    - Macroeconomic outlook remains uncertain, including temporary versus persistent impacts.
  - Recovery:
    - Uncertainty abates; greater clarity on temporary versus permanent effects across sectors and countries.
    - Crisis may leave long-lasting damage to output and debt levels, with significant distributional effects; many economies could require debt resolutions and/or adjustment programs to support employment and an inclusive, green recovery.

### Key cross-cutting collaboration point
- FAD organized seminars with the World Bank on social protection measures; country teams should contact FAD for information on relevant counterparts.
- Development partners often have greater sectoral expertise, crucial for estimating social spending gaps and designing policy responses—especially helpful in low-income countries and fragile states.

### Key statistics and global assessment (containment phase)
- By the end of 2020, 170 countries—almost 90 percent of the world—are projected to have lower per-capita income than in 2019.
- More than US$13 trillion in economic stimulus and rescue packages announced as of end-June 2020.

### Containment phase — IMF assessment and operational guidance
- Priority objectives:
  - Save lives: increase health spending to prevent/mitigate spread and treat infected persons; fund public health measures (social distancing, school closures, border closures) to avoid overwhelming health systems.
  - Save livelihoods: scale up social protection for elderly, unemployed workers, and food-insecure children (e.g., school meal recipients).
- Relevance of social spending during containment:
  - Providing adequate social spending (critical medicine, food, other supplies) to protect poor and vulnerable households is critical for macroeconomic stability.
  - Where social protection is lacking, priority should be adequacy and expanding the number of beneficiaries consistent with realistic financing possibilities.
  - Trade-offs: given information and administrative constraints, coverage may require imperfect targeting (efficiency trade-offs). Improving adequacy and efficiency is particularly challenging in low-income countries with limited administrative capacity.
  - Scale of response should be considered in context of fiscal sustainability (liquidity constraints, debt burdens, potential for revenue mobilization) and administrative capacity.
- IMF financing arrangements and operational changes:
  - Emergency financing arrangements (RFI and RCF) provide rapid assistance without full programs; access limits under the regular RFI window and the exogenous shocks window of the RCF were temporarily doubled through at least October 2020, and annual access for resources in the GRA and under PRGT arrangements was increased through April 2021.
  - CCRT reformed in April 2020: provides grants to poorest and most vulnerable members to cover IMF debt obligations for an initial phase of six months; fundraising ongoing to extend grant-based debt relief for up to two years.
  - Some cases: augmenting an existing UCT-quality program or starting a new one under containment if: (i) financing needs exceed emergency financing access limits; (ii) a UCT-quality program is on-track and can be augmented; or (iii) program design/phasing can be adjusted to meet financing needs.
  - Both emergency financing and UCT-quality program requests require staff to prepare a baseline scenario for the macroeconomic framework.
- Practical assessment questions for teams during containment:
  - What are the social spending needs and what measures have been taken so far? (Assessed in collaboration with authorities and IDIs where possible; estimate additional cost relative to pre-crisis budget via bottom-up approaches.)
  - How will social spending be sustainably financed? (External sources: IMF, multilateral/regional development banks, bilateral donors — is external financing temporary or permanent? Domestic sources: drawdown of government deposits, domestic bond issuance, expenditure reallocation and reprioritization.)
  - What actions ensure fiscal transparency, public accountability, and institutional legitimacy? (Procurement and cash transfer implementation are vulnerable to corruption; attention to good governance is necessary.)
  - What is the estimated impact of additional spending on debt and fiscal sustainability? (Identify one-off versus more durable measures; flag measures that may need sunset clauses; periodic reassessment is useful.)
- What to include in IMF program documents during containment:
  - Staff report (SR) and program documents (MEFP, LOI, TMU) should reflect the IMF team’s assessment of COVID-19 social spending needs; level of detail varies with country circumstances.
  - Emergency financing (RFI/RCF): although no ex-post conditionality, SR should report: (i) staff assessment of social spending needs; (ii) social spending-related policy measures; (iii) estimated fiscal impact and financing sources. LOI should explain how resources will be directed to those most in need and measures to prevent corruption. RCF authorities should specify policies to protect the vulnerable.
  - IMF-supported programs (EFF, ECF, SBA, SCF): fiscal targets can be adjusted by the additional social spending needed or met through reprioritization. SR should report contingency plans for higher spending needs or financing shortfalls. Where social spending is critical for program success, assess macro-criticality channels carefully and consider conditionally calibrated commitments. Indicative targets (ITs) on social spending can be (re)calibrated to include COVID-19 needs; reprioritization within existing social spending envelopes may be considered when capacity constraints bind.
  - Examples for program document content:
    - Health sector adequacy: SR should assess adequacy of health services to curb COVID-19, report estimated additional fiscal cost and name financing sources (World Bank, bilateral donors, WHO, UNICEF), and explain impact on fiscal and debt sustainability. Program documents could include commitments on hiring, PPE procurement, and transparency measures (examples: Honduras and Ukraine cited).
    - Social assistance transfer adequacy: SR should attempt to determine adequacy (e.g., transfers as share of average income of poorest quintile) or coverage (share of poorest quintile covered), report planned measures to increase adequacy and coverage (payment increases, enrollment of new beneficiaries), and explain financing or time-bounding to ensure fiscal sustainability. MEFP/LOI/TMU could commit to time-bound targets for enrollment or cash transfer increases and transparency/review measures (example: Benin cited).

### Stabilization phase — relevance and operational guidance
- Relevance:
  - Continued emphasis on adequate social spending to support poor and vulnerable households until recovery; fiscal sustainability becomes more prominent as financing constraints/debt concerns may limit policy scope.
  - Increased focus on efficiency: evaluate initial crisis policy responses and adjust as needed; manage targeting trade-offs carefully.
- Sector focuses:
  - Health sector: consider transition to a new normal for health systems; assess whether reforms bolster pandemic response capability, are appropriately costed and fiscally sustainable, and whether scope exists to improve efficiency (in consultation with WHO and stakeholders). Examples noted: Central Africa Republic, Chad, Hong Kong SAR.
  - Social protection: expand/adjust measures to improve effectiveness and incorporate lessons learned (examples: Dominican Republic, Finland, Peru). Consider medium-term affordability and prioritize the most impactful measures; ensure inclusion of particularly affected groups (e.g., informal workers).
- Assessment approach in surveillance and IMF financing:
  - Take stock of containment lessons and recalibrate social spending discussion.
  - Reassess COVID-19-related social spending before incorporating into baseline macroeconomic frameworks; integrate with country-specific epidemiological and capacity factors.
  - Revisit earlier estimates by probing: additional budget resources required during stabilization; whether expansions in social programs or health capacity are still needed; which programs are winding down or need ramping up; appropriate pace of adjustment (e.g., shift from ICU expansion to testing/contact tracing).
  - Assess financing sustainability and impact on fiscal targets, rules, and debt sustainability; determine available external financing to supplement IMF-supported programs.
  - Identify capacity weaknesses exposed by the crisis (PFM, procurement) and determine whether addressing these weaknesses is macro-critical or critical to program success.
- Distributional concerns and policy responses:
  - Evidence indicates major epidemics have raised income inequality and hurt employment prospects of those with only basic education while scarcely affecting employment of people with advanced degrees.
  - Distributional impact analysis during stabilization can inform policy to mitigate inequality and job-market scarring; collaboration with IDIs (World Bank) recommended.
- Program design and conditionality considerations:
  - Assessment of ongoing COVID-19 social spending needs should be reflected in SR and program documents (MEFP/LOI/TMU), with prominence varying by country.
  - Coverage in program design will focus on measures supporting macroeconomic stability; medium-term health and social safety net reforms may be less prominent depending on lending instrument and guidance on parsimony of conditionality.
  - Quantitative conditionality: where critical for program success, quantitative targets (PCs or IT floors) on social spending could be included, consistent with fiscal targets and built from bottom-up realistic estimates, including clear definitions of social spending and which expenditures are COVID-19 related. Baseline and adverse scenarios should be described, mindful of positive social spending impact on growth via potentially high fiscal multipliers.
  - Financing: program documents should explain financing of prolonged elevated social spending or, conversely, the pace of retrenchment if spending tapers. Discuss contingency plans if external financing falls short; include off-budget and donor-financed spending in program documents.
  - Structural conditionality: time-sensitive reforms to close gaps in health and social safety nets may be critical; if capacity or program scope limits implementation, discuss sequencing for a medium-term reform agenda with authorities and IDIs. This is particularly relevant for low-income and fragile states.
  - Transparency, accountability, and legitimacy: stabilization phase provides opportunity for more thorough oversight and efficiency adjustments.

### Recovery phase — relevance and operational guidance
- Macro-relevance:
  - Social spending is likely to be macro-critical through fiscal sustainability and spending efficiency channels as post-crisis fiscal constraints bind and countries seek fiscal space for recovery measures.
  - Country teams should take a medium-term view focusing on:
    - Support for poor and vulnerable households throughout recovery.
    - Adequate health services until vaccines/effective treatments are identified.
    - Targeting responses to poor and vulnerable households or most affected sectors where appropriate.
- Sectoral considerations:
  - Health sector: countries may scale back crisis-response spending but may need to maintain health spending above pre-crisis levels. Key questions: what is the appropriate new normal for health spending and is it fiscally sustainable? Is there scope to improve health outcomes via efficiency?
  - Social protection: as labor markets recover, means-tested social assistance and unemployment insurance spending should decline automatically. Scale-back of crisis-era structural expansions (eligibility changes) may be warranted to preserve fiscal sustainability, although political economy constraints can complicate retrenchment. Recovery may also be appropriate time for active labor market policies to reduce long-term scarring for low-skilled workers.
  - Education: budgets may need bolstering to address learning loss during lockdowns, with disproportionate impacts on students from poor and vulnerable households.
- Engagement approach:
  - Engagement during recovery should center on a well-articulated pandemic recovery plan that may include reforms to strengthen social spending systems for the longer term (improved identification and delivery systems).
  - Collaboration with IDIs or IMF technical assistance can ensure the plan meets country needs and enhances resilience to health risks, including macro-critical preparedness measures.
  - Country teams should refer to the Strategy for IMF Engagement on Social Spending for guidance on how and when to engage on social spending in surveillance and programs.

*Source: htnea2020002 - Introduction (IMF How-to Note, September 2020).*

### Annex I. Focus and Program Engagement on Social Spending during and in the Aftermath of the COVID-19 Crisis

### Annex I. Focus and Program Engagement on Social Spending during and in the Aftermath of the COVID-19 Crisis

### Containment: Priority is to save lives and livelihoods
- Social spending critical for macroeconomic stability.
- Immediate priority is to scale up health and social protection.
- Measures to provide adequate social spending to protect the poor and vulnerable and expand number of beneficiaries.
- Possible efficiency tradeoff (imperfect targeting due to urgency).
- Advice should be consistent with realistic financing possibilities.

Program engagement notes:
- RCF/RFI:
  - Social spending needs can widen fiscal/BOP gaps.
  - No ex-post conditionality.
  - Assessment of social spending: quantify needs, assess policy measures and fiscal impact, identify sources of financing, ensure governance and sustainability.
- EFF/ECF/SBA/SCF:
  - As in RCF/RFI.
  - Also need contingency plans in case of higher social spending or external financing shortfalls; social spending conditionality possible.
- All:
  - Reflect in PN, SR, MEFP/LOI/TMU – with varying detail as needed.

### Stabilization: Priority is to continue supporting poor and vulnerable households while being mindful of fiscal sustainability
- Draw lessons from containment phase and recalibrate the focus of social programs to make policy response more effective.
- Continued emphasis on providing adequate social spending and ensuring coverage of poor and vulnerable households.
- Increased focus on efficiency and transition to new normal (health).
- Mindful of sustainability of financing to meet social spending needs through the end of the crisis.

Program engagement notes:
- EFF/ECF/SBA/SCF, including new program requests or augmentations:
  - Take stock of lessons from the containment phase.
  - Shift focus to building blocks for the recovery phase.
  - Assess social spending needs, measures taken so far and future measures needed, sustainability of financing, capacity, governance.
  - Quantitative and structural conditionality if critical for program success.
  - Reflect in PN, SR, MEFP/LOI/TMU – with depth of coverage reflecting country-specific circumstances.

### Recovery: Priority is to provide support to the poor and vulnerable through the recovery
- Focus on sustaining support for health and social protection in the new normal (medium-term perspective).
- Consider social spending measures to accelerate the recovery (ALMPs, education).
- Focus on fiscal sustainability and efficiency channels of macro-criticality, though adequacy still needs to be assessed.
- Consider targeting, if appropriate.

Program engagement notes:
- EFF/ECF/SBA/SCF:
  - Social spending integrated into well-articulated pandemic recovery plan in baseline.
  - Discussions with authorities should take a medium-term view; emphasis on sustaining support and accelerating the recovery.
  - Quantitative and structural conditionality if critical for program success.
  - Reflect in PN, SR, MEFP/LOI/TMU – with analysis and depth reflecting country circumstances.

*International Monetary Fund | September 2020*

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_Source: https://www.imf.org/-/media/files/publications/howtonotes/2020/english/htnea2020002.pdf_