IMF Engagement on Social Safety Net Issues in Surveillance and Program Work

Technical Notes and Manuals, October 3, 2022

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IMF Engagement on Social Safety Net Issues in Surveillance and Program Work

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Bibliographic details

• Published: October 3, 2022
• Series: Technical Notes and Manuals
• DOI: https://doi.org/10.5089/9798400222504.005

Summary and Purpose

• The technical note discusses:
  • the different channels through which SSN spending may become macro-critical;
  • how to assess the importance of these channels; and
  • the types of policy responses that are appropriate and the trade-offs involved in choosing among them.
• Emphasizes the complementary role of labor market programs (for example, unemployment benefits and active labor market programs) in assessing SSN spending.
• Highlights the importance of early engagement and coordination with development partners with expertise on social safety nets and with different stakeholders when formulating policy advice.
• States that IMF engagement on social safety net (SSN) issues is likely to expand as member countries respond to growing challenges in the economic and fiscal landscape.
• Notes that SSNs play a crucial role in protecting households from poverty, promoting inclusive growth, and maintaining social stability.

Channels through which SSN spending may become macro-critical

• SSN spending can become macro-critical through multiple channels (as described in the note); the document provides a framework for identifying these channels and their implications for surveillance and program work.
• The note treats SSN spending alongside labor market programs to facilitate a more comprehensive assessment.

Assessment framework and analytical focus

• The technical note outlines how to assess the importance of macro-critical channels for SSN spending, providing guidance for surveillance and program engagement.
• Analytical focus includes:
  • spending adequacy;
  • spending efficiency;
  • fiscal sustainability; and
  • distributional outcomes (for example, benefit incidence and Benefit-cost ratio).

Policy responses and trade-offs

• The note discusses types of policy responses that are appropriate when SSN spending is macro-critical and the trade-offs involved in choosing among them.
• Policy considerations include:
  • balancing fiscal sustainability with protection of vulnerable households;
  • sequencing and targeting of SSN expansions or retrenchments; and
  • complementarity with labor market programs such as unemployment benefits and active labor market programs.

Coordination and operational guidance

• Emphasizes early engagement and coordination with development partners that have expertise on social safety nets.
• Recommends coordination with different stakeholders when formulating policy advice to ensure comprehensive and context-sensitive SSN strategies.

Content in this bundle

• IMF Engagement on Social Safety Net Issues in Surveillance and Program Work
  • IMF Engagement on Social Safety Net Issues in Surveillance and Program Work (Markdown version)
  • IMF Engagement on Social Safety Net Issues in Surveillance and Program Work (PDF)