EU Funded Projectimplemented by Support to IFI Coordination in the Western Balkans and Turkey 26...

EU Funded Project implemented by

Support to IFI Coordination

in the Western

Balkans and Turkey

April 10, 2023

Social Sector Expenditure in the Western Balkans

RCC Conference What Kind of Social Agenda for the Western Balkans?

Mary O’Mahony



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Objectives of Presentation

o Scene setter for presentations to follow

o Compare expenditure trends among different WB countries

o Compare social expenditure levels in the WB to those of the EU countries

o Outline the social sector priorities identified by governments in recent Economic and Fiscal Programmes



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Real GDP Growth and Fiscal Stance

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Source: IMF Data (latest published Articles IV as of April 2011)

Severe impact of crisis; slow recovery; relatively low growth rates



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“Austerity” Measures

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Sharp decline in revenues, marginal decline in expenditure. Marked decrease in capital expenditure. Current expenditure maintained or even increased



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WB Expenditure by Economic Classification: Wage Bill

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Some decreased in spending on wages and allowances in public sector but lots of variances




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WB Expenditure by Economic Classification: Capital Expenditure

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...in general capital expenditure reduced




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WB Expenditure by Economic Classification: Social Transfers

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At the same time, overall social transfers peaked in 2009 and are still above pre-crisis period.




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WB Expenditure by Functional Classification: Health Expenditure

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Source: Functional Expenditure Data from the latest available EFPs/PEPs as of April2011)

Some decreases in expenditure (NB approximate data)



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WB Expenditure by Functional Classification: Education Expenditure

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In general education expenditure also decreased in 2009 and 2010



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WB Expenditure by Functional Classification: Social Protection Expenditure

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Social protection expenditure increased it share as % of GDP in 2009 due to additional unemployment pressures.



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Comparison of WB and EUSocial Expenditure

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in % GDP for 2008 EU 27 EU 16 WBGovernment Revenue 44.6% 44.9% 39.3%Government Expenditure 46.9% 46.8% 41.5%Fiscal Balance -2.3% -1.9% -2.3%Expenditure by Economic ClassificationWage Bill 10.3% 9.9% 9.3%Social Transfers 20.1% 21.6% 15.5%Expenditure by Functional ClassificationHealth 6.9% 6.9% 5.6%Education 5.2% 4.8% 4.4%Social Protection 18.2% 18.9% 13.0%

Source: For EU data EUROSTAT and for WB data IMF and EFPs/PEPs



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Comparison of the WB Social Expenditure to the EU

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Lots of variance by country

in % GDP for 2008 EU 27 EU 16 WB Albania BiH Croatia FYRoM Montenegro SerbiaGovernment Revenue 44.6% 44.9% 39.3% 26.8% 46.0% 39.8% 32.5% 48.6% 41.9%Government Expenditure 46.9% 46.8% 41.5% 32.3% 49.5% 40.7% 33.4% 48.8% 44.5%Fiscal Balance -2.3% -1.9% -2.3% -5.5% -3.5% -0.9% -0.9% -0.3% -2.6%Expenditure by Economic ClassificationWage Bill 10.3% 9.9% 9.3% 6.1% 12.0% 9.8% 5.2% 12.1% 10.7%Social Transfers 20.1% 21.6% 15.5% 8.6% 15.4% 16.3% 18.9% 15.9% 17.9%Expenditure by Functional ClassificationHealth 6.9% 6.9% 5.6% 2.5% 7.1% 5.6% 6.7% 5.8% 5.7%Education 5.2% 4.8% 4.4% 3.5% 5.5% 4.1% 4.8% 4.8% 3.8%Social Protection 18.2% 18.9% 13.0% 7.9% 14.9% 13.5% 10.6% 14.6% 16.4%

Source: For EU data EUROSTAT and for WB data IMF and EFPs/PEPs



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EFPs – Social Sector Priorities

o Importance of social sector highlighted but little detail on specific reforms or investments

o Albania: Training programmes for unemployed, health and education are priority sectors for capital expenditure

o Bosnia and Herzegovina: Reform of social transfers (agreements with IMF and World Bank), labour market reform and human capital development

o Croatia: Capital investment in health care, social welfare, science & education. Administrative reforms of social welfare system



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EFPs – Social Sector Priorities

o FYR Macedonia: Capital investments in education, child care and social protection. Simplification of social benefits system and focus on labour market reform

o Montenegro: Reforms in labour market, education, social protection and health sector. Use of PPPs to facilitate capital investments

o Serbia: Reduction of share of social protection as % of GDP, reform of social protection system, education reform (rationalisation of school network) health care reform



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Issues Arising

oStalled economic growthoNeed to generate socio-economic developmentoImprove labour skills, increase productivity, higher value added products and servicesoIncreased social needs, social inclusion issuesoPressure for reform of health, education & social protection systemsoAlignment to EU/international normsoFinancing sources for capital expenditure



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April 10, 2023

WWW.WBIF.EUThank you for your

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EU Funded Projectimplemented by Support to IFI Coordination in the Western Balkans and Turkey 26...

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