## Challenges Facing SSNs in Emerging and Developing Economies:

_IMF Working Papers, May 3, 2024_

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## Bibliographic details
- Authors: Fernanda Brollo, David Coady, Samir Jahan, Riki Matsumoto
- Published: May 3, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400274749.001

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### Framework and methodology
- Uses the standard social welfare framework to assess social safety nets (SSNs) performance in terms of targeting efficiency and budget effort.
- Applies this framework to the World Bank’s ASPIRE database.
- Discusses proxy-means testing as a tool to enhance targeting efficiency and highlights the need for careful design to manage the horizontal inequity inherent in proxy-means testing.

### Key findings
- The variation in poverty alleviation achieved by SSNs in emerging markets and developing economies (EMDEs) is driven mainly by variation in budget effort.
- Increasing transfer spending is therefore key to strengthening SSNs in EMDEs.
- The inability of many EMDEs to finely target transfers to poor households means required spending increases are prohibitive over the short term, especially in low-income countries.
- Enhancing targeting efficiency is emphasized as crucial to making spending increases feasible.

### Policy implications and recommendations
- Prioritize increases in transfer spending (budget effort) to improve poverty alleviation from SSNs in EMDEs.
- Strengthen targeting efficiency to reduce the fiscal cost of achieving given poverty-reduction objectives.
- Consider implementing proxy-means testing to improve targeting, with careful design to mitigate horizontal inequity and other distributional concerns.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2024/05/03/challenges-facing-ssns-in-emerging-and-developing-economies-548582_