Asia's Fiscal Challenge: Financing the Social
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Asia’s Fiscal Challenge Financing the Social Protection Agenda of the Sustainable Development Goals Challenge: Fiscal Asia’s Developing countries in Asia have expanded their social protection programs. One of the key challenges is creating sustainable fi nancing—considered the bedrock for success of the social protection agendas of the United Nations Sustainable Development Goals (SDGs) Agenda and Strategy of the Asian Development Bank (ADB). This book focuses on the analysis of fi scal requirements to achieve the social protection agenda of the SDGs and explore options to close the gaps in population coverage and adequacy of protection of social assistance, health care, and social insurance systems of ADB developing members over the next decade. Goals Development the Sustainable of Agenda the Social Protection Financing About the Asian Development Bank ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacifi c, while sustaining its e orts to eradicate extreme poverty. Established in , it is owned by members— from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. ASIA’S FISCAL CHALLENGE FINANCING THE SOCIAL PROTECTION AGENDA OF THE SUSTAINABLE DEVELOPMENT GOALS Edited by Sri Wening Handayani OCTOBER ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org ASIAN DEVELOPMENT BANK ASIA’S FISCAL CHALLENGE FINANCING THE SOCIAL PROTECTION AGENDA OF THE SUSTAINABLE DEVELOPMENT GOALS Edited by Sri Wening Handayani OCTOBER 2018 ASIAN DEVELOPMENT BANK Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2018 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444 www.adb.org Some rights reserved. Published in 2018. ISBN 978-92-9261-290-0 (Print), 978-92-9261-291-7 (e-ISBN) Publication Stock No. TCS178935-2 DOI: http://dx.doi.org/10.22617/TCS178935-2 The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. 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Notes: In this publication, “$” refers to United States dollars. Corrigenda to ADB publications may be found at http://www.adb.org/publications/corrigenda. Contents Tables, Figures, and Boxes iv Foreword vii Acknowledgments viii Abbreviations ix Contributors x Overview 1 Sri Wening Handayani and Michael Cichon 1 The Social Protection Agenda of the Sustainable 10 Development Goals and Its Fiscal Challenge Michael Cichon 2 Mongolia 50 Ludovico Carraro 3 Myanmar 73 Mariana Infante Villarroel 4 Timor-Leste 103 André F. Bongestabs 5 Social Assistance 132 Franziska Gassmann 6 Health Care 168 Axel Weber, Michael Cichon, Eduardo P. Banzon, and Karlo Paolo P. Paredes 7 Social Insurance 186 Krzysztof Hagemejer Appendixes 1 Sustainable Development Goals, Governance, and Outcome 210 Targets Constituting the Social Protection Agenda of the Sustainable Development Goals 2 A Robust, Two-Step Modeling Methodology 214 3 Statistical Tables 241 Tables, Figures, and Boxes Tables O.1 Assessment of Likely Fiscal Stress Invoked by the Social Protection 8 Agenda of the Sustainable Development Goals 1.1 Four Major Categories of Social Protection System 12 1.2 Projected 16-Country Composition of Sustainable Development 19 Goal-Related Social Protection Requirements for 2030 1.3 Estimated Long-Term Average Resource Requirement to Close 23 the Social Protection–Sustainable Development Goal Gap, 2015–2030 1.4 Earlier Revenue Increase and Projected Additional Resource 26 Requirements to Close the Social Protection Gap, 16 Countries 1.5 Projected Government Surpluses/Deficits under Alternative 28 Revenue Assumptions, Lower Estimate for 2030 1.6 Projected Government Surpluses/Deficits under Alternative 29 Revenue Assumptions, Upper Estimate for 2030 1.7 Central Indicators of Expected Fiscal Stress after Closing the 30 Social Protection Gap at the End of the Projections Period (2030) 1.8 An Alternative Fiscal Scenario, 2015–2030 32 2.1 Expenditure on Social Insurance and Social Assistance, 2010–2015 55 2.2 Identified Gaps in Meeting the Sustainable Development Goals’ 59 Social Protection Agenda 2.3 Key Policies to Close Gaps in Meeting the Sustainable Development 64 Goals’ Social Protection Agenda 2.4 Three Cost Scenarios for Closing the Sustainable 66 Development Goal Expenditure Gap 3.1 Summary of Main Public Social Protection Schemes 75 3.2 Social Protection Provision, Gaps, and Options 82 3.3 Policy Options to Close Demand-Side Social Protection Gaps 85 in Myanmar 4.1 Summary of Main Public Social Protection Schemes, 2015 106 4.2 Social Protection Gaps and Strategies 113 4.3 Summary of Adapted Model Social Transfer Options 120 5.1 Estimated Costs of Closing the Income and Sustainable 153 Development Goal-Related Gaps Tables, Figures, and Boxes v 6.1 Selected Health Financing Indicators in 16 Focus Countries, 172 Latest Available Year 6.2 World Health Organization-Recommended Service Coverage 176 Indicators, Latest Available Year 6.3 Estimation of the Resource Requirements to Close 181 the Health Protection Gaps in Selected Asian Countries, 2015 7.1 Scope of Statutory Coverage by Statutory Schemes 192 in Sample Countries 7.2 Old-Age Pension Beneficiaries as Percentage of Population 193 over Statutory Pensionable Age 7.3 Old-Age Pensions—Key Features of Main Extension Programs 195 and Estimates of Legal Coverage 7.4 Employment Injury—Key Features of Main Programs 199 and Estimates of Legal Coverage 7.5 Share of Wage and Salary Earners in Total Employment, 2015 201 7.6 Estimates of Social Insurance Coverage Gaps, 2015 202 or Latest Available 7.7 Assumed Increase in Social Insurance Coverage and Estimated 206 Poverty Reduction Effects of Expanding Share of Employment Covered by Social Insurance and by Extending Coverage by Contributory Pensions through 2030 Figures 1.1 Total Estimated Cost of Closing the Social Protection Gap by 2030 18 1.2 Projected Composition by Country of Sustainable Development 20 Goal-Related Social Protection Requirements for 2030 1.3 Estimated Trends in Resource Requirements to Close 22 the Social Protection Gap, 2015–2030 1.4 Total Estimated Cost of Closing the Social Protection Gap by 2030, 25 15 Countries 3.1 Social Assistance Spending, Selected Asian Countries, 2013 77 3.2 Spending on Education and Health 83 3.3 Social Assistance Spending, Selected Asian Countries, 2030 90 3.4 Government Revenue as Percentage of Gross Domestic Product 95 2009–2013, Selected East and Southeast Asian Countries 3.5 Tax Revenues and Gross Domestic Product per Capita, Selected 95 Southeast Asian Countries, 2014 4.1 Public Expenditure on Social Assistance, Education, Health, 107 and Infrastructure, as a Share of Non-Oil Gross Domestic Product, 2005–2015 4.2 Poverty Headcount and Gap, by National and International 108 Poverty Lines Tables, Figures, and Boxes 4.3 Composition of Social Protection Additional Required Resources 121 by Type, Three Estimates, 2030 5.1 Poverty Trends Based on National Poverty Lines 135 5.2 Monetary versus Multidimensional Poverty, Latest Years 136 5.3 Contribution of Dimensions to Multidimensional Poverty, 137 Latest Years 5.4 Stunting Disparities for Children Under-5, Latest Years 138 5.5 Coverage of the Population and of the Poor with Social Assistance 142 5.6 Distribution of Cash Transfers to the Poor 143 5.7 Share of Benefits in Total Household Consumption of the Poor 144 5.8 Poverty Reduction Effect 145 5.9 Pension Coverage 147 5.10 Expected Demographic Trends 149 6.1 The Universal Health Coverage Cube 169 6.2 Selected Health Financing Indicators in the 16 Focus Countries, 173 Latest Available Year 6.3 Total Health Expenditure as a Share of Gross Domestic Product, 177 2014 7.1 Estimated Reduction of Poverty Due to Extension of Social 205 Insurance Coverage to All Employees, 16 Asian Countries, 2015–2030 Boxes 1.1 Output and Outcome Targets 14 1.2 Assumptions 15 2.1 A Combination of Two Benefits to Tackle Poverty 62 3.1 Better Poverty Data to Inform Program Design Options 86 in Myanmar 7.1 Fiscal Space and Social Protection 191 Foreword In the last few years, many developing member countries (DMCs) of the Asian Development Bank (ADB) have expanded their social protection programs, helping to improve the well-being of the poor and vulnerable in Asia, and to lower the numbers of those living in extreme poverty and of the socially excluded.