1. Poverty Budgeting -- LAC
Norman Hicks
Sector Manager, Poverty, LAC-PREM
June 22, 2001

2. Social Programs
Social programs, esp. safety nets, should expand during a recession as poverty is increasing.
Evidence from Argentina and Mexico show just the opposite

5. Incidence vs. Coverage
We tend to concentrate on the targeting efficiency of programs; e.g. what percent goes to poor
Coverage is also important; e.g. what percent of poor people receive the program.

6. Argentina: Benefit Incidence of Government Social Assistance by Income Quintiles (%)
Quintile Distribution of Households Receiving Assistance
Public Benefits Public Public and Private
First
Second
Third
Fourth
Fifth
Total
Poor
Non-poor
(a) Weighted by provincial government spending on social welfare
Source: SIEMPRO, Social Development Survey, 1997, Includes food, cash and other forms of in kind assistance.

7. Distribution of Benefits
Since the income share of the poor is very low, even a government program which provides proportional benefits, is pro-poor (benefits are a greater share of the income of the poor than the rich).
Thus, a program which provides more benefits to the rich may not be regressive.

8. Quintile: I II III IV V total Expenditures:
ARGENTINA:Total Social Expenditures and Taxes by Quintiles, Urban Argentina 1996 (percent of total)
Quintile: I II III IV V total
Expenditures:
Social Sectors
Social Insurance
Total Social
Tax Distribution
Income Shares

9. Clarification of Objectives
Many social programs have a mix of objectives, or objectives are not clearly specified.
Example: a scheme to provide payments to keep children in school is seen as a safety net, but actually is an education program.

10. Evaluation of Programs
Social programs are often thought to be pro-poor but are often never evaluated
Many programs have dubious benefits for poor (labor training), or do not fulfill stated objectives (nutrition).
PRSPs: Define targets for poverty reduction, including sub-targets in health nutrition, education, infrastructure, etc.

11. PRSP --The Target Problem
We want PRSPs to have targets concerning outcomes, or at least outputs, not inputs.
We can control inputs (teachers, schools, roads built, water connected, etc.), but not outcomes.
We hold governments responsible for reaching PRSP targets, but do not know the relationships between inputs and outcomes.

12. IDG goals complicate the problem….
We encourage countries to strive to reach IDG goals…but they may be unrealistic in many countries..
Halve extreme poverty by 2015
100% primary school enrollment
Eliminate gender gap in enrollment
Reduce child and infant mortality by 2/3rds
Reduce maternal mortality by 3/4ths

13. We need…
More humility….we really don’t know how to achieve PRSP/IDG goals, in many cases, and…
More Research….evaluations of programs and studies on input/output relations… including optimum strategies.