Fiscal Aspects of Social Protection Programs

With the help of digital technology, improved data and good narratives, the government can take advantage of the commodity and energy boom, and at the same time protect the vulnerable groups.

Turmoil and uncertainty may be an inseparable part of the lives of the poor. In an earlier article, my colleague, Rema Hanna, reviewed the impact of the Russian-Ukrainian war on the poor and vulnerable. The poor have been particularly hit by the increase in food and energy prices, especially food, because food is a large part of the consumption of the poor.

Furthermore, Hanna wrote, the government would refrain from raising prices and would bear the burden of subsidies — as is the case in the subsidized fuel (BBM) — but the impact must be paid for in the future, for example by increasing taxes, or even cutting the budget for productive investments, such as infrastructure and health spending. Yet we know that infrastructure or health investment is needed to boost future productivity.