THE ARAB MONETARY FUND LAUNCHES THE SECOND EDITION OF THE REPORT "WINDOW ON THE ROAD TO REFORM: SOCIAL SAFETY NET REFORMS IN THE ARAB COUNTRIES"

THE ARAB MONETARY FUND LAUNCHES THE SECOND EDITION OF THE REPORT "WINDOW ON THE ROAD TO REFORM: SOCIAL SAFETY NET REFORMS IN THE ARAB COUNTRIES"






2019-10-28







 

Within the framework of the efforts of the Arab Monetary Fund to support the decision makers and economic policy makers in the Arab countries, the Fund considered the importance of issuing the report "Window on the road to reform" And what policies and procedures are being implemented, challenges and lessons learned from the reality of similar reform programs implemented globally . The report aims to support Member States' efforts to implement the various economic reform policies and programs being implemented in specific areas including civil service reforms, social safety nets, pension funds, labor and product markets, and enhancing competitiveness.

The theme of `` Social Safety Net Reforms '' was chosen as the focus of the report for 2019 due to the significant role they play in developing countries and emerging market economies in combating poverty, reducing income inequality and improving the living standards of the most vulnerable populations. The past years have seen widespread interest by many developing countries in strengthening social safety nets, with many implementing fiscal reforms aimed at controlling public budgets, including several policies and measures, including the reform of commodity support programs, many of which have proved ineffective under the monopoly of those with disabilities. The high incomes of most of the gains of these programs and the high burden of these programs on the state budget.

Social safety nets include cash and in-kind transfers targeting poor families and vulnerable groups to protect them from the impact of economic shocks, natural disasters and other crises. World Bank data show that social safety nets, which currently cover some 2.5 billion people, not only help countries invest in human capital, but also represent an important source of income for the poor and vulnerable, helping to improve their standard of living. In low-income countries, however, only one in five poor people is covered by social safety net programs. The countries of the world vary widely with regard to the rates of spending on social protection programs.

The Arab countries are witnessing an increasing importance to strengthen the role of social safety nets in the framework of the ambitious economic reform programs implemented by these countries for years, through which they seek to implement economic reforms in support of economic stability while focusing on reducing the burden of implementing these reforms on the fragile and low-income classes . The use of social safety nets in the Arab countries is not limited to low- and middle-income countries, but is also used by Arab countries with high income levels in order to ensure the equitable distribution of the fruits of growth and ensure balanced development, and focuses on a number of programs such as housing programs, and grants in the field of education , And opening accounts for citizens whose income is below a certain level through which monthly cash transfers are received to help support some families and groups thus improving living standards and social welfare.

The programs adopted within the framework of social safety nets vary from one Arab country to another, and fall into eight main categories, the most important of which are in-kind subsidy programs, where the total expenditure on these programs as a percentage of GDP is about 0.62% in the Arab countries, followed by programs of conditional cash support. In addition to alleviating poverty, it aims to support human capital by requiring beneficiaries of these programs to adhere to specific conditions for support such as enrolling their children in schools, or regularly visiting health centers to help achieve the Sustainable Development Goals. Spending about 0.30% of GDP in the Arab countries.

A window on the road to reform touched on some Arab experiences on reforms to strengthen social safety nets, pointing out that these reforms focused on achieving the following objectives:

[list="vertical-align: inherit; box-sizing: border-box; margin-bottom: 10px; color: rgb(0, 0, 0); font-family:"]
[*]Increase financial allocations to social safety nets.

[*]Expand targeted coverage.

[*]Improved targeting mechanisms for eligible categories.

[*]Switch to cash support programs.

[*]Develop ways to manage social safety nets to ensure increased levels of efficiency and effectiveness.

[/list]

In this context, Arab countries have tended to increase financial allocations to social safety netsIn the context of economic reform programs implemented in some countries, savings from energy subsidy reform have been used to provide financial resources to improve spending under these programs. In Egypt, for example, government spending on social safety nets amounted to about 347 billion Egyptian pounds in 2018 with a growth rate of 33 percent, compared to about 260 billion pounds in 2017, representing the highest growth rate during the period (2011-2019). The government is keen to boost spending on social protection networks to mitigate the impact of the implementation of the economic reform program adopted in 2016 in cooperation with the International Monetary Fund (IMF) on the vulnerable. It is noteworthy that the total expenditure on the programs included under these networks amounted to 1.3 trillion pounds during the period (2014 / 2015-2018 /2019). As part of these reforms, Egypt has earmarked about 1 percent of GDP to boost spending on social safety nets, benefiting from financial savings from the phasing out of fuel subsidies.

Some Arab countries have also adopted reforms to extend the coverage of the targeted programs of these networks to include some groups not already covered in order to ensure the economic burden of the vulnerable groups. For example, the reforms applied in Jordan included increasing the number of families benefiting from the support of the National Aid Fund , which in turn regardless of monthly allowances for about 100 thousand families with a total value of about 110 million Jordanian dinars, to include 85 thousand new families during the period (2019- 2021 ) at a cost of A total of 100 million dinars. Within the framework of social safety nets, some Arab countries focused on extending beneficiaries of health insurance programs to new eligible categories.

These reforms have also been accompanied by an effort by Arab countries to improve the targeting mechanisms of eligible groups . To achieve this goal, the unified national registry program was built and developed, and the social researchers project was launched with a view to accurately targeting and targeting the poor, low-income and vulnerable groups.

The Information and eGovernment Authority in Bahrain is also conducting a number of studies and surveys on the level of income per capita and household, and measuring consumption rates. These studies contribute to giving decision-makers and strategists a picture of the size of destitute families, the causes of poverty and other important information related to the work of social safety nets.

In Egypt, the government uses a specific targeting methodology based on the poverty maps issued by the Central Agency for Public Mobilization and Statistics (CAPMAS), which monitor poverty rates at the governorate, district and village levels. National authorities use a standardized formula to measure poverty, with some adjustments that address the gaps between rural and urban, between able-bodied and others, and between the integrated family and the female-headed household, among others. The government also adopts a multidimensional poverty methodology, not just physical poverty, to ensure the coverage of social coverage.

In terms of reforms to the transition to monetary subsidies , the report pointed out that the majority of social safety net reform measures based on the shift towards monetary subsidies in the Arab countries are related to the correction of fuel and electricity prices and the reform of commodity subsidy programs that proved inefficient in helping vulnerable groups as the rich benefited most from Gains of these programs. Accordingly, the Arab countries have recently taken advanced steps towards the transition to monetary support, especially during the period (2012-2016). In this context, Arab countries have intensified their efforts to shift from in-kind support to monetary support, including Egypt, Jordan, Saudi Arabia and Bahrain. There has been widespread interest in the shift towards conditional cash support programs aimed at improving education and health levels and enabling governments to achieve the 2030 Sustainable Development Goals.

In Saudi Arabia, the Citizen Account Program is one of the most important development initiatives undertaken by the Kingdom to protect eligible families by providing direct cash support to low-income people, as part of the program to achieve financial balance within the programs included in the "Saudi Vision 2030". In this regard, the total actual expenditure on this program was estimated at 37.5 per cent of the total expenditure on compensation of workers during 2019. 

In Egypt, Takaful and Karama is a mechanism to provide conditional cash support to eligible families in Egypt. The program seeks to enable poor families to access basic rights such as access to health services, education and proper nutrition. The program provides monthly assistance to eligible groups and is implemented through the Ministry of Social Solidarity, the Ministry of Education and the Ministry of Finance. The total number of households benefiting from these programs reached 3.6 million families for the fiscal year 2018/2019. It is noteworthy that the total expenditure on the cash support program in Egypt in general amounted to about 17.5 billion Egyptian pounds during the fiscal year (2018/2019) by 12 billion pounds for the Takaful and Karama program and 5.5 billion pounds for the social security pension.

On the other hand, reforms to strengthen social safety nets have also included the efforts of some Arab countries to develop ways to manage social safety nets to ensure increased levels of efficiency and effectiveness. Among these measures is the formation of mini-ministerial committees responsible for the management of social safety nets under the chairmanship of the Prime Minister, in coordination with other actors and civil society organizations. In addition, executive bodies rely on specific mechanisms to increase the effectiveness of these networks, including:

• Linking the information systems of the various stakeholders within the framework of a system of follow-up and accurate evaluation of the target groups, and reviewing them periodically.
  
  
• Establish rules and criteria for inclusion and exclusion under the umbrella of social safety nets to rationalize resources allocated for support.
  
  
• Establish a mechanism to verify the eligibility of beneficiaries in coordination with the concerned authorities, social researchers and civil society organizations.
  
  
• Establish a grievance mechanism for rejected families or groups and grant them the right to review data.
  
  
• Establishment of local entities "community accountability committees" under the supervision of the ministries of social affairs to contribute to the identification of eligible and revise databases.
  
  
• The use of smart cards for all eligible social safety nets to support the financial inclusion of all groups.
  
  

The measures also included the adoption of social safety nets in the Arab countries by some of the performance indicators within the framework of social safety net programs focusing on measuring the gap between the actual performance of the programs and the targeted levels. This includes indicators such as:

• Proportion of population below the poverty line included in cash support programs.
  
  
• Number of poor households benefiting from cash support programs.
  
  
• Spending on social safety nets.
  
  
• Proportion of women benefiting from social safety net programs, especially for women heads of household.
  
  
• Number of family children eligible for regular support in enrollment.
  
  
• Number of females eligible for support and beneficiaries of health care programs.
  
  

In light of the above, the future orientations of Arab governments with regard to the reform of social safety nets will focus more on increasing the financial resources allocated to these programs, and adopting methodologies that will target the targeted beneficiaries while moving towards mechanisms to promote self-reliance through adopting programs aimed at supporting families. The needy by supporting their productive components, whether through the promotion of small and medium enterprises and household projects or programs to combat unemployment.

 Arab countries also seek to achieve the necessary integration between future strategic plans adopted during the coming period and the expected role of social safety nets as one of the possible mechanisms for governments and support to national efforts in the development of education and health, poverty reduction, unemployment and the empowerment of women. In addition, future visions of strengthening social safety nets in the Arab countries aim to establish new partnerships with the private sector, companies and investors to provide productive employment opportunities for eligible eligible groups. In addition, a number of legal, regulatory and institutional reforms have been adopted to increase the effectiveness of these networks, as indicated by the experiences of the countries included in the report.

Download the report 




https://www.amf.org.ae/ar/content/waytoreformissu2



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