Despite the International Monetary Fund (IMF)’s announcement of its Strategy Towards Gender Mainstreaming a year ago, and the World Bank’s Gender Strategy 2016-2023 expiring two months ago, Arab governments continue to allocate only 4.6% of their GDP to social protection and a mere 3.2% to healthcare. These figures are significantly lower than the (miserly) global averages of 12.9% and 5.8%, respectively.
Furthermore, the Arab region’s expenditure on programs and services targeting women is shockingly minimal, accounting for less than 0.01 percent of overall social expenditures. Is this hypocrisy or pinkwashing? Both international financial institutions (IFIs) must be fully aware that women are disproportionately affected by limited social spending and the lack of adequate social protection and services. Moreover, both IFIs have long been cautioned about the social consequences of their interventions and conditionality.
During the roll-out of the IMF’s inaugural Gender Strategy last August, Ratna Sahay, the Senior Gender Adviser of the Fund, emphasized the significance of addressing gender gaps, stating that “gender gaps are large, and they are macro critical”. She also acknowledged that while the strategy had been approved by the Fund's board, securing sufficient financial resources for its implementation was still a challenge at that time. Little did she realize that her organization could make substantial progress in promoting gender-transformative development in the global South without requiring significant additional or dedicated funds. What our countries truly need is a shift in the approach to multilateralism! But what does this exactly entail?
A Shifting Understanding of Social Protection
IFIs have a limited definition of social protection, primarily focusing on social safety nets that are often funded and implemented through civil society and international organizations. Examples include Lebanon’s Emergency Social Safety Net Program, Egypt’s Takaful and Karama Program, Jordan’s Takmeely Support Program, and Tunisia’s Amen Social Safety Net Program, all of which receive financial support from the World Bank. These initiatives aim to provide cash transfers to the impoverished populations, intending to help them meet their immediate needs. However, they have a narrow scope and exclude many individuals in need, as they employ proxy or mixed-means testing as a poverty-targeting method. This approach has a significant margin of error and omits both the poorest individuals and those in the “missing middle” class. In many cases, these programs consider households as a uniform entity, disregarding the specific needs of different household members, particularly women and the LGBTQ+ community.
These interventions offer assistance rather than true social security, as they are ineffective, exclusionary, and unsustainable. The amounts transferred are inadequate and fail to restore people’s purchasing power in the face of increasing living costs. Moreover, these interventions are transient, lack integration, and do not complement a comprehensive state-led universal social security system that encompasses health coverage and minimum income security for all individuals throughout the life cycle. Such a system would provide a social protection floor that takes into account informal labor, both paid and unpaid care work, and migrant labor, which are heavily influenced by gender dynamics. It is this kind of system that can foster gender-sensitive social protections and promote solidarity financing-based initiatives like social pensions, maternity grants/insurances, care funds, and global social protection funds.
Preserving Fiscal Spaces and Expansionary Fiscal Policies
IFIs not only prioritize social safety nets over comprehensive social security schemes but also impose austerity measures and deplete public budgets under the guise of fiscal consolidation. As a result, they shrink the fiscal space available to governments, limiting their capacity to finance universal social security and leading to an increased reliance on humanitarian relief and aid-dependent social assistance.
IFIs push countries into a debt trap. Through IMF programs, concessional loans, and the allocation of Special Drawing Rights (emergency soft loans issued to all IMF member states in crisis times), countries such as Egypt, Tunisia, Jordan, Morocco, Yemen, and Sudan are trapped in intergenerational and gender-blind indebtedness. This situation is characterized by unsustainable debt structures, insolvency, defaults, and the need to borrow more to repay old debts, including interest rates and surcharges. Consequently, IFIs not only waste development funds on short-sighted and reactive safety net programs but also accumulate debt burdens on Southern countries through this pattern. Vulnerable groups, who are most affected by political and economic shocks in the region, bear the heavy brunt of this debt burden.
Austerity measures, in addition to states’ ability to restructure accumulated sovereign debt, further impede social spending. Austerity is an integral part of IMF loan packages, compelling governments to reduce public spending, particularly in social areas, instead of encouraging expenditure rationalization. For instance, Egypt, the second-largest debtor to the IMF globally with a debt-to-GDP ratio of 88.5%, has witnessed a decline in public spending from 11.43% of GDP to just under 8% since the implementation of the IMF loan program in 2016.
Contractionary fiscal policies undermine social protections for vulnerable groups, including women who are disproportionately impacted by social vulnerabilities. Furthermore, they have a broader negative impact on social policies, such as capping public sector wages, reducing subsidies for food, energy, and medicine, and diminishing social services, even though the poor benefit from these services the most. Currently, this issue affects 85% of the global population. In fact, austerity obstructs necessary tax reforms, as governments find it politically less costly to cut expenditures than to increase public revenues through progressive taxation. As a result, income taxes, wealth taxes (such as corporate income, capital gains, property, and real estate taxes), Robin Hood taxes, and other redistributive taxes are lacking, while indirect and regressive taxes, including pink taxes, are abundant. Gender-responsive budgeting and the deployment of social/gender audits take a backseat as governments attempt to offset austerity with low or regressive taxation.
Minding Their Power of Influence
IFIs must recognize their significant influence over countries’ public policies and development paradigms. While they claim to regulate – and perhaps infringe upon the countries’ sovereignty in the process – in order to “protect”, they should understand that people and nations now require protection from their regulations. Their interventions are typically accompanied by a set of conditions that uphold the "cascade approach", which aims to maximize development financing by prioritizing private solutions whenever possible.
Even essential public services like energy, water, and transportation are being commercialized or privatized, often through public-private partnerships, as a result of their recommendations. As Arab countries lack the necessary corporate social responsibility frameworks and legal mechanisms to control the private sector’s role in the economy, the social impact of this model is expected to be bleak. For example, the International Financial Corporation (IFC) has been investing in the gig economy without adequately addressing the decent work violations associated with gig work, being based on zero-hour contracts, freelance arrangements, and on-demand modalities while lacking job and social security. The IFC largely overlooks the gender lens in its approach, despite the significant involvement of women in the gig economy, especially the platform economy, notably after the COVID-19 pandemic and the subsequent surge in digitalization.
By focusing on resource mobilization and on maximizing economic growth and job creation, IFIs neglect the importance of the quality of growth and jobs, as well as that of the redistribution of resources. They fail to recognize their potential role in transforming climate finance from a tool of neoliberal cooptation into an opportunity to reduce both inter and intra-country inequality and finance public and social services. Additionally, IFIs disregard their ability to exert a form of “benign conditionality”, whereby they compel inefficient and corrupt governments to adopt rational social and economic policies that serve the public good. These policies can include advocating for the establishment of a universal social registry, as is the case in Lebanon currently, or pushing for specific fiscal, monetary, trade, or labor policy reforms. Egypt is already demonstrating considerable potential in this regard.
If IFIs continue with “business as usual”, they will perpetuate a system in which the global North exploits cheap labor and resources from the global South, resulting in a net loss of $14-for-every-dollar of aid received. The South will therefore derive no real benefits from foreign aid. Unless this status quo changes, power and profit will take precedence over people’s welfare, and women and the most vulnerable will always be the primary victims.
The views represented in this paper are those of the author(s) and do not necessarily reflect the views of the Arab Reform Initiative, its staff, or its board.