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Budget surplus should be used for social spending to reduce poverty, says UNDP

Sen David / Khmer Times Share:
The UNDP has supported the roll-out of the government’s COVID 19 of Poor ID cash transfer programme. UNDP

The UNDP released a report yesterday claiming that by spending just 1.5 percent of the country’s GDP, Cambodia could reduce the number of people in poverty to just three percent of the population.

The report said that this could be achieved by developing a social assistance system that would allocate cash or assets to poor households – with a focus on helping children, the elderly and citizens with disabilities.

The system – coined as the ‘Social Protection Floor’ – would maximise the impact of social protection in Cambodia, the report said.

The report also looked at various ways of delivering assistance – such as by allocating cash transfers or through a mix of cash and asset transfers (so-called graduation-based programmes).

Although the supporting analysis was completed before the COVID-19 crisis took hold, the report now has special relevance for the challenges Cambodia now faces. In many respects, the report’s proposals mirror the scheme the government has adopted to combat COVID-19’s impacts on the vulnerable – namely the IDPoor scheme rolled out in June.

Nick Beresford, UNDP Cambodia’s Resident Representative said: “This report shows that a system of support is effective for reducing poverty and in normal times, entirely affordable for Cambodia.”

The UNDP has already expressed support of the government’s IDPoor cash transfer scheme, and later this year will trial a mixed asset and cash scheme set to benefit around 3,000 households.

UNDP also said that Cambodia’s engagement in Public Finance Management Reform has led to significant progress in resource mobilisation and budget management as well as resulting in the restoration of budget balance.

In 2018, the public budget surplus was equivalent to approximately $150 million, with the amount deemed sufficient to substantially close the poverty gap if used to cover the costs of social safety nets, it said.

The most economically efficient use of public funds would be a safety net scheme that accounts for household size or a scheme that complements transfers with allowances, the report said.

It also said that regardless of the method behind Cambodia’s social assistance system, the report estimates that it would cost approximately $80 million to reduce poverty by half, equating to an expenditure of just below 0.5 percent of GDP, bringing total social spending to 1.4 percent of GDP, a proportion which is still below the global average.

Director of the Social Welfare Department of the Ministry of Social Affairs Chhour Sopanha said recently that the government has provided social assistance to over 560,000 families affected by the pandemic.

“The government is trying its best to implement this programme to benefit the people amid the pandemic,” he said.

 

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