Overall budgets and spending trend

GSW Report 2015 CoverOverall, countries should be spending close to 60% of their budgets on the MDGs, but current allocations are only 38% and falling. In total, government spending is falling one third short of MDG needs. The latest GSW analysis shows that government spending in developing countries has risen rapidly in 2012-14, but revenues have not. This has led to growing deficits, resulting in sharp increases in debt service. As a result, debt service is “crowding-out” MDG spending in 21 of 66 countries, and MDG spending has not risen to the same degree as overall government spending, because debt service has absorbed 40% of the extra spending, and infrastructure 35% - only 25% of additional finance has been allocated to MDG sectors.

This is not only leaving huge gaps in MDG spending needs but will leave even bigger gaps in the new Sustainable Development Goals set to follow the MDGs.

GSW’s latest analysis shows that a total additional public spending needs for the SDGs (including the sectors above as well as access to modern energy and infrastructure) could be as high as US$1.5 trillion a year.

How is this being financed?

Not only has GSW been investigating what governments are spending, but how they are financing this, as this can also draw vital lessons for the new SDGs. It finds that government revenue currently funds 77% of spending, which has been more stable, aligned with government priorities, balanced between investment and recurrent, and easy to implement than donor-funded spending.

Based on lessons from tracking country budgets, GSW recommends how the SDGs should be financed: by doubling tax revenue, through a radical overhaul of the global tax rules; doubling concessional development cooperation, and improving its allocation and effectiveness; and raising US$500 billion in public innovative financing. In addition, all spending must be dramatically reoriented to fight inequality, and be much more transparent and accountable to the world’s citizens.

From Numbers to Nurses: Why Budget Transparency, Expenditure Monitoring, and Accountability are Vital to the Post-2015 Framework

From Numbers to NursesOctober 2014 - Today, on the sidelines of the the IMF-World Bank Annual Meetings in Washington DC, Government Spending Watch (GSW), International Budget Partnership (IBP) and Oxfam are launching a joint paperpdfwhich identifies how vital ensuring budget transparency, monitoring, and accountability will be to the success of the Post-2015 development framework.

The post-2015 framework will contain the most ambitious set of development goals ever agreed and will require a significant increase in the effectiveness and efficiency of government spending. Bringing together available evidence and new quantitative analysis, this brief shows that budget transparency, expenditure monitoring and accountability can contribute to increases in spending towards, and better results related to, development goals. Whether or not this occurs crucially depends on data availability, space for civil society engagement, political will, and government capacity. Ensuring positive outcomes in the post-2015 agenda requires a “data revolution” in tracking government spending, aid and results.

The Age of Austerity

South Centre  IPDThe paper: (i) examines the latest IMF government spending projections for 181 countries by comparing the four periods of 2005-07 (pre-crisis), 2008-09 (fiscal expansion), 2010-12 (onset of fiscal contraction) and 2013-15 (intensifiedfiscal contraction); (ii) reviews 314 IMF country reports in 174 countries to identify the main adjustment measures in high-income and developing countries; (iv) discusses the threats of austerity to development goals and social progress; and (v) calls for urgent action by governments to adopt alternative and equitable policies for socio-economic recovery.  


Oxfam - The Impact of the Global Economic Crisis on the Budgets of Low-Income Countries

The Impact of the Global Economic Crisis ReportThis report examines the impact of the global financial crisis on the budgets of low income countries, especially their spending to reach the Millennium Development Goals. It finds that the crisis created a US$65 billion budget revenue gap, which countries offset by borrowing and some grants, allowing them to stimulate their economies in 2009 to combat the crisis. However, in 2010 and 2011, there are risks that spending would fall and take countries further off track from the MDGs. It recommends actions for the IMF, the donor community and LIC governments to accelerate MDG spending.

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Unicef - A Recovery for All – Rethinking Socio-Economic Policies for Children and Poor Households

A Recovery for All PublicationChapter V of this study updates the 2010 analysis discussed below. It finds that developing countries responded initially to the crisis with expenditure stimulus, before accelerating cuts from 2010 onwards. Social spending was also increased somewhat in 2008-09, but may be falling in 2010-12. The study also discusses the way in which austerity measures such as targeting social protection spending more narrowly, removing subsidies, or reforming pension and health insurance systems to reduce benefits, can be pernicious for the poor. It concludes with a range of recommendations to expand fiscal space and support higher spending investments for a socially-responsive recovery.

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Unicef - Prioritizing Expenditure for a Recovery for All

Prioritizing Expenditures WPThis paper assesses the expenditure projections among 126 low and middle income countries over the near term and their potential implications for children and poor families during the economic recovery. It finds that expenditures have increased but there is a risk of increasing austerity in 2010, and highlights the dangers of potential social expenditure reductions for poor children and families. It calls for policymakers to evaluate the potential human and development costs of foregone social expenditures and to consider alternative policies to increase spending and promote a "Recovery for All."

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