According to a UNICEF report published today, one in eight countries in the world spends more on debt than social services. Some countries use 40% of their revenues to service debt. The report says that for every dollar spent on essential social services, the countries with the highest debt service, including Chad, Gambia, Haiti and South Sudan, spend at least $3.
In Africa, debt service repayments accounted for 12% of government revenues, while domestic healthcare allocations accounted for an average of 6%. This shows that poor countries spend more on debt repayment and less on other public services that people need, such as education, health care, and social protection. The welfare state might not be static. There is little evidence that insufficient government spending in the social sector correlates with a decline in human capital and increased poverty rates in poorer countries. The limited fiscal space to finance social expenditure is likely to be accompanied by fixed human capital. Still, many are reorganising their social protection systems to meet the challenges of the new social risks of ageing.
To illustrate, the average annual expenditure on debt service in education, health, and social protection was 9.3% of GDP in the analysis period, up from 8.5% in 2010. Rapidly rising public debt and high foreign debt are playing creditors against the world’s poor, especially women and girls.
Significant step back
According to an analysis for PwC’s annual Women in Work Index, Covid 19 is wiping out the significant gains made over the past decade for women in the workplace. GDP outcomes in 2030 are expected to be similar as in 2015, with a 2% increase in female employment. While the pandemic is turning work and home life upside down, working women face painful choices that threaten to destroy their chances of holding leadership positions.
According to COVID 19, there will now be no significant change in the number of women in employment in developed countries. Policymakers would not make decisions in 2020 that would significantly improve gender equality over the next decade. This trend could be reversed, with the index expected to fall by an estimated 2.1 points between 2019 and 2021, according to an analysis for PwC’s annual Women in Work Index. Progress for women in the workforce could be back to 2017 levels below Covid 19 by the end of 2021. Given the potential to add $13 trillion to global GDP by 2030, compared to a regressive scenario, it may still be valuable to take action now to advance gender equality.
Women and men’s participation rate would rise from 0.67% to 0.61% in 2020, marking progress. This scenario increases the gender equality rate in the labour market from 1.1% (0%) in 2019 to 1% in 2020 to 0% in 2030 compared to the “do-nothing” scenario in 2030.
The growth of women in the labour market had helped create an economy closer to female participation level than it has been since the 1970s when it actually soared. After a period of falling labour market participation, male participation in the labour market has recovered in recent years. The gain of women in the labour markets has helped create growth that will probably remain where it is until 2020.
Significant social welfare
To repair the damage caused by COVID 19 and women’s work by 2030, progress towards gender equality must be
at least as strong as its predecessor, the Gender Equality Act of 1990. Suppose this pandemic reverses the gains on the poverty front. In that case, it will likely change the progress in women’s empowerment and turn back the clock a few decades. This year’s recovery is unlikely to bring female labour force participation back to pre-COVID levels. GDP growth will be at risk even if women’s hours of work increase during the recovery.
Meanwhile it’s been found that health spending significantly impacted IHDI, although its impact at conventional levels seemed insignificant. Indeed, as a wealthy nation, the US has had a significant positive effect on its spending on health and social security.
Our findings support the view that social spending is an essential driver for developing human capital in poor countries, not just debt repayment. We also saw increased spending on health and education, with education spending relatively larger than previously. A modest increase in health and care spending, but no significant change in the impact of debt repayments.
When health and education benefits are added, actual social welfare in the United States is more significant than in almost any other country. Only Burundi, Kenya and Rwanda spend more than 1% of GDP on social security, according to the latest year for which data on social protection are available. F – Net and pension subsidies are absorbed in the sum of welfare spending. Still, when you add all these figures, US social spending far outstrips that of other nations.
An ongoing debt
Many low-income countries spend more to pay down their debts than payback, with Angola and Ghana spending more than 55% each. Six countries, including Lebanon, which is experiencing a financial debt crisis and last week sought IMF advice on handling debt payments. The cost of servicing the debt of the country’s public sector employees exceeds 40%. The United States, Australia, Canada, France, Germany, Italy, Japan, and South Korea all spend more on debt, according to the IMF, on debt service than on health and education combined.
In 2019, 64 countries spent more on debt service than on health, 45 spent more on debt payment than on social protection, and 24 spent more than half of their public education. 25 countries worldwide, already burdened by poverty and deprivation, are spending the same amount on debt service as they spend on education, health, and social protection combined. According to the IMF’s annual report on the public sector’s state, they spent more on average in 2019 than they did in 2010. By 2019, the 25 nations, 25% of them, will have spent at least half of their total debt service as in 2011, combined with education or health or social protection.
Debt service must undermine countries “ability to guarantee the right to health and education even during pandemics. COVID-19, “The Pandemic”: Countries with the highest debt service, including Chad, Gambia, Haiti, and South Sudan, spent at least $3 for every dollar spent on essential social services, according to the report. According to the Jubilee Debt Campaign, 64 low-income countries spent more on payments to their foreign debt in 2019 than on health care.
Debt is imminent
This policy requires jobs and programs and makes ordinary people pay disproportionately for what they cannot create. This is because the IMF and the World Bank have imposed their own version of the “job creation” model.
This means, for example, that Bangladesh spends 15% of its income on debt servicing abroad, while only 4% is spent on health. “Shockingly, 45 countries are spending more on debt servicing than on helping the poorest and most vulnerable through social protection”, says Dr Keshav Bhattacharya, Director of the World Bank’s Global Poverty and Development Programme. Kenya spends 22% of its budget on debt servicing. In comparison, the IMF says spending on poverty-reduction programs is only 9% of GDP.