Middle East and Central Asia have socially and economically improved in the last two decades with majority of the countries in the region making strides in health and education outcomes, according to the International Monetary Fund (IMF).
However, the IMF also mentioned that the region continued to face several challenges of improving social conditions and boosting inclusive growth. This was stated in their recent report “Social Spending for Inclusive Growth in the Middle East and Central Asia”.
- The regions saw a ten percent increase in social spending per capita that could close 20–65 percent of the Human Development Index (HDI) gap between countries and their global peers.
- The gap in outcomes between the region’s countries and global comparators is larger than that in spending, suggesting that not only the amount but also the efficiency of social spending may need to be enhanced. Our empirical findings suggest that increasing the efficiency of spending in the region to the global frontier could—without any increase in outlays— eliminate one-third of the HDI gap.
- Spending efficiency is linked strongly to indicators of institutional capacity and governance.
The study also suggested some key areas for policy action. It said that countries, especially where public social spending was relatively low may need to focus on raising that spending. The report said that reallocations within existing budget or expansion of those envelopes via increased revenue mobilization may be needed for this.
The report suggested that all the countries should aim to increase the efficiency of social spending, especially those with limited capacity to expand their fiscal space and those that fall significantly below the efficiency frontier. This required improving the targeting of social protection and addressing existing gaps, which can facilitate the payment of benefits and reduce the scope for corruption,