1. Sequencing, Cost-Efficiency and Fiscal-Sustainability
of Social Protection:
An Overview
Yanchun Zhang/AI. Blateau
UNDP
Mitigating Vulnerabilities & Promoting Resilient Growth
Sequencing, Cost-Efficiency and Fiscal-Sustainability of Social Protection – Policy Dialogue
Seoul, Korea, 1 November 2012

2. Outline
I. Motivation
II. Sequencing
III. Cost Efficiency
IV. Fiscal Sustainability
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3. I. Motivation
 SP is increasingly recognized for its productive role;
 Faster economic growth in developing countries makes
social protection more affordable;
 Many questions remain to be answered to link theory to
practice.
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4. II. Sequencing of SP
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5. SP Arrangements
 Informal SP: family/kinship
 Semi-formal SP: CSOs, NGOs, mutual aid
arrangements
 Formal SP: public, private, hybrid
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6. Informal-Semiformal SP arrangements limitations
 Inadequate protection : potential collapse; too
small payouts
 May exclude poorest or discriminate certain
social groups
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7. Triggers
 Internal triggers: Change of political or
economic context within the country
 Rapid economic and income growth
 Democratization
 Post-conflict
 External triggers
 Economic crises
 Climate change
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8. III. Cost-Efficiency of SP
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9. Cost-Benefit Analysis
 Cost-efficiency vs. cost-effectiveness
 Direct and indirect costs
 Direct and indirect benefits
 Cost benefit analysis
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10. Costing Tools
 ILO (2008): 7 sub-Saharan African countries,
5 Asian countries
 HelpAge International (2011): 50 low- and
middle-income countries
 WHO (2010): 49 low-income countries
 Save the Children (2009): 57 developing
countries
 UNICEF and ODI (2009): 5 West African
countries
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11. SPF Costing Tool and RAP
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12. Benefits
 Brazil’s Bolsa Família
 South Africa’s grant (including the old-age
pension, disability grant and child support
grant)
 India’s Mahatma Gandhi National Rural
Employment Guarantee Act
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13. IV. Fiscal-Sustainability of SP
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14. Fiscal Space and Fiscal Sustainability
 A fiscally sustainable social protection system
is the one that does not undermine a
government’s overall fiscal position and
underlying trends in the medium- and long-
term.
 Fiscal space is the available budget room that
a government can use to spend on a desired
purpose
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15. A Dynamic and Comprehensive Framework
 A dynamic approach is needed because many types
of social protection expenditures require not only
some budgetary room today but also the availability
of future budgetary resources.
 A comprehensive approach is needed because fiscal
space created for social protection may immediately
or ultimately crowd out spending on other
programmes.
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16. Practice of Social Protection Fiscal Sustainability
Analysis
 Viet Nam
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17. Create Fiscal Space
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18. El Salvador
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19. Mozambique
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20. Thailand
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21. Financing options
 Economic growth leading to Increasing tax revenues
 Improving revenue collection
 Reallocating expenditures
 Increasing spending efficiencies & reducing leakages
 Introducing innovative financing mechanisms
 Increased aid & transfers
 Borrowing
 Debt restructuring
 Key factor : political will
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22. Conclusion
 Connecting the dots between vulnerability assessment,
costing exercise, fiscal space evaluation and benefits
simulation.
 Embedding SP in a national development strategy
 Public support;
 Political will;
 Public-private partnerships;
 Scaling up formal SP while engaging existing schemes.
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