Enhancing UNICEFs Economic Crisis Response:A Policy Strategy Emerging from the Montreux DiscussionsSocial Policy and Economic Analysis Unit, PAKM UNICEF Policy and Practice Groupgfajth@unicef.orgjchai@unicef.orgrmendoza@unicef.org

New York 14 April, 2009PD Technical Staff Meeting, Labouisse Hall

The structure of the presentationUNICEFs Consultative Workshop in Montreux The global economic crisisA child and gender-centered socioeconomic crisis response: a social protection plus strategyBuilding blocks: next steps for SP+Concluding remarks

1. Background on Montreux A UNICEF Consultative Workshop with over 40 participants from all major regions plus Brussels, Geneva, Florence and New York offices, 25-27 March 2009, Montreux, Switzerland

See agenda, participants and key documents at intranet webpage: http://intranet.unicef.org/dpp/PolicyAdvocacy.nsf

Purpose: help coordinated rolling out UNICEFs Focus Area 5 Policy Advocacy and Partnerships for Children Rights

the UNICEF-UNIFEM Side Event at the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus, Doha, November 2008

earlier consultations: the Pratolino process and the September 2008 UNICEF Executive Board special focus session

UNICEFs 2006-2011 Strategic Priorities following the 2008 mid-term review cast child poverty, social budgeting and social protection as priority areas for analysis and advocacy

1. Background on Montreux (cont)Innovation

the first ever meeting of UNICEFs emerging global network of socioeconomic policy specialists focus on the economic crisis ILO, WHO and academia invited for discussion on social protection

Outcomes

agreement on the main thrusts of a social protection plus strategy to contain crisis impacts on children and womendelivered by concrete follow-up steps in five main areasMonitoring the impact of the crisisBuilding crisis-related analysis and evidencePolicy advocacy strategyStrengthening capacity for socioeconomic policy engagementEnhancing knowledge managementwith the purpose to turn the crisis into an opportunity for countries to address long-standing barriers to progress for children.

1. Background on Montreux: the six sessionsSession 1. Introduction and review on the economic crisis

Session 2. Partnerships

Session 3. Stocktaking on FA5

Session 4. Crisis response: enlarging policy space

Session 5. Crisis response: social protection for children and women

Session 5. Linking building blocks for a strategy

Session 6. Concluding session

2. The global economic crisis

2. This economic crisis is more than just a recessionProgress in Financing for Development (FfD) action between 2002-2007

Private capital flows (especially FDI) GOOD PROGRESSTrade as engine of growth PROGRESS Increasing international cooperation (Aid/Debt) PROGRESSDomestic resources mobilization UNEVEN PROGRESSSystemic issues (monetary, financial and trading systems) LITTLE PROGRESS

What we see in 2008-2009 is a blackout in globalizationthe financial crisis has turned former Monterrey progress areas into transmitting channels of the downturn no progress areas impair national and global ability to respond!

Current projections:Decline in net private capital flows from $900bn in 2007 to $165bn in 20096% drop in trade in 2009Drop in foreign aidDrop in remittances NB. All projections are highly uncertain 2010 may not actually be much better!

2. Global economic crisis: transmission channelsCOPING STRATEGIES (e.g. by women)NATIONAL ECONOMYAccess to employmentAccess to financial servicesAccess to basic goodsOther linkagesAccess to public servicesBoys/GirlsSHOCKWORLD ECONOMYPRIVATE INVESTMENTSFOREIGN AIDOTHER LINKAGESGOODS & SERVICES TRADEHOUSEHOLD ECONOMY Overleveraged financial assets, weak regulation Asymmetries in trade, capital and labour flowsCompounding factors: governance and institutions, culture and geography, climate change, technological change, demographic change etc.REMITTANCES Imbalances in food and energy markets Sustainability and equity issues around development

2. The global economic crisis: key points from the discussion in MontreuxThis crisis is universal no countries, no population groups will be spared from its effectsThe concrete mix of transmission channels is region- and country specificApart from OECD, CEE/CIS (external financing, terms of trade) and Latin American countries (external demand) appear the most negatively affected currentlyEconomic growth projections were revised downward also for Africa: here currently +2.4% growth is expected in 2009 (are similar to the rate of population growth) Without China and India developing countries on average will post no economic growth in 2009

Countercyclical macroeconomic policy requires financing, fiscal space

2. The global economic crisis: key points from the discussion in Montreux (cont)Fiscal space, reserves vary reflecting FfD progress over 2002-2007Source: World Bank.The index averages standardized indexes of debt/GDP, international reserves, fiscal deficit, current account balance, and reversible capital inflows using data for 2002-07.

2. The global economic crisis: key points from the discussion in Montreux (cont)But some of the fiscal space has already been already used up to contain inflation fuelled by rising food and energy prices in 2008Source: IMF, World Economic Outlook Database

2. The global economic crisis: the IMF is becoming a key player againFilling in holes left by shrinking private capital flows

2. The global economic crisis: G20 fiscal stimuli Prasad and Sorkin March 2009 Brookings, Washington D.C.

Initial Conditions

Spending in 2009

Total size of the stimulus

Public

Debt

(percent

2008

GDP)

Fiscal

Balance

(percent

2008 GDP)

USD

amount

(bb)

Percent

2008

GDP

USD

amount

(bb)

Percent

2008

GDP

Tax cut

share

Argentina

51.0%

1.7%

4.4

1.3%

4.4

1.3%

0.0%

Australia

15.4%

0.3%

8.5

0.8%

19.3

1.8%

41.2%

Brazil

40.7%

N/A

5.1

0.3%

8.6

0.5%

100.0%

Canada

62.3%

0.1%

23.2

1.5%

43.6

2.8%

45.4%

China

15.7%

0.4%

90.1

2.1%

204.3

4.8%

0.0%

France

64.4%

-2.9%

20.5

0.7%

20.5

0.7%

6.5%

Germany

62.6%

0.9%

55.8

1.5%

130.4

3.4%

68.0%

India

59.0%

-4.2%

6.5

0.5%

6.5

0.5%

0.0%

Indonesia

30.1%

-1.3%

6.7

1.3%

12.5

2.5%

79.0%

Italy

103.7%

-2.7%

4.7

0.2%

7.0

0.3%

0.0%

Japan

170.4%

-3.1%

66.1

1.4%

104.4

2.2%

30.0%

Korea

27.2%

0.9%

13.7

1.4%

26.1

2.7%

17.0%

Mexico

20.3%

0.0%

11.4

1.0%

11.4

1.0%

0.0%

Russia

6.8%

6.2%

30.0

1.7%

30.0

1.7%

100.0%

Saudi Arabia

17.7%

11.2%

17.6

3.3%

49.6

9.4%

0.0%

South Africa

29.9%

0.2%

4.0

1.3%

7.9

2.6%

0.0%

Spain

38.5%

-2.4%

18.2

1.1%

75.3

4.5%

36.7%

Turkey

37.1%

-1.5%

0.0

0.0%

0.0

0.0%

N/A

UK

47.2%

-4.8%

37.9

1.4%

40.8

1.5%

73.0%

US

60.8%

-3.2%

268.0

1.9%

841.2

5.9%

34.8%

2. The global economic crisis: key points from the discussion in Montreux (cont)Some countries will pursue fiscal stimulusUN/UNICEF monitoring, analysis and advocacy could help making the fiscal stimulus child and gender-sensitive

Others will need to undergo structural adjustment/receive IMF support UN/UNICEF monitoring, analysis and advocacy could help protecting women and children

The depth and length of the global recession matters for the design of national macroeconomic policy strategies Countercyclical/Keynesian policies create momentum for social protection But caution is needed: the last thing we want is fragile states newly indebted! Can we forge an alliance between IFIs and UN/UNICEF?

New poverty versus old poverty: understanding of vulnerability

Paradigm shift: state versus markets? More nuanced approach is needed Need for evidence-based, child and gender sensitive social protection Washington Consensus may survive as knee-jerk reaction in country contexts

3. Crisis response: a social protection plus strategyThree main strategy elementsChild and gender-sensitive social protection systems that keep focus on the protection and promotion objectives rather than on the instruments

Social and gender-sensitive budgeting for basic social services and social protection that considers urgency as well as longer-term trends and objectives (MDGs, climate change, demographic change, migration)

Multidimensional, engendered approach to child poverty focusing on investing in children (avoiding irreversible losses)

Implementation

Evidence-based, sustainable, concrete policy proposals at the country level in partnerships with governments and the international community Strengthening national and sub-national monitoring and policy analysis

Advocacy and mobilization at the global level (Global Social Floor, Comprehensive Framework for Action, Vulnerability Facility) Global Vulnerability Alert

4. Building blocks: next steps for SP+Monitoring the impact of the crisisShort guiding note on practical field-based monitoring (Mahesh Patel, EAPRO and Jingqing Chai, DPP-PAKM) Item to be addressed in the upcoming M&E meeting in April (Marco Segone, CEE-CIS and DPP/IRC)Monitor aid flows (Margaret Wachenfeld, UNICEF Brussels and Bjorn Gillsater, GMA)

Building crisis-related analysis and evidenceFinalize the child-sensitive social protection statement and circulate with partners (Gaspar Fajth, DPP-PAKM)Position paper on UNICEFs policy response including its implications for work across FA1-5 of the MTSP (David Stewart, DPP-PAKM with PD colleagues)Look into the new stimulus packages crisis related budget-adjustments (Ron Mendoza DPP-PAKM and Jingqing Chai, DPP-PAKM in coordination with ROs) Policy advocacy strategyDraft message from the Executive Director asking country offices to feedback on their activities related to the crisis (Richard Morgan, DPP)

4. Building blocks: next steps for SP+ (Cont)

Social policy website / policy advocacy toolkit /list of forthcoming events (David Stewart, DPP-PAKM)2-pager on UNICEF policy advocacy that would leverage social/economic policy work (Juliana Lindsey, ACMA and Gordon Alexander, CEE-CIS)Strengthening capacity for socioeconomic policy engagementReview training programs and recommend a revised portfolio related to social policy (Tony Hodges, Gabriele Koehler ROSA, WCAR, Jingqing Chai, DPP-PAKM and Barbara Brown, HR)Enhance fund raising activities (Jens Matthes, PFP, Gaspar Fajth, DPP-SPEA, Marco Segone, CEE-CIS)

Enhancing knowledge managementWebpage on the financial/economic crisis and In Practice and further set of actions aimed at knowledge sharing (Ian Thorpe, DPP-PAKM)

EducationHealth

Social Welfare

Family Supportbenefits,servicesViolence preventionReferral

Prevention Identification ReferralChildren in the justice system Social PolicySocial protectionChild protection5. Concluding remarks our model on understanding social protection for children needs further thinking and elaboration

5. Concluding remarks (cont) The Programme Groups contribution to UNICEFs crisis response is essential! Thank you!