Monday, 22 February 2021 21:06

FUSADES: National Budget must be in function of improving the lives of the population

Written by Cindy Moreno

The Salvadoran Foundation for Economic and Social Development (FUSADES), through a public policy note, considered that the nation's budget should be an instrument to promote the country's development and the improvement of the population's quality of life.

This is even more relevant considering the effects caused by the COVID-19 emergency, among which the following stand out: increases in inequality, poverty, hunger and unemployment, bankruptcy of small businesses, children lagging behind in educational processes, lack of attention to some diseases other than COVID-19, discontinuity of vaccine programs, among other affectations.

Without taking into account pension funds, by 2021 it is proposed to allocate four out of every ten dollars of the General Budget of the Nation for Social Development, which is consistent with the average allocation that has been made during the last decade.

Most of these funds are for areas defined as priorities for 2021: Education, Science and Technology (42.8%) and Health (33.0%).

Although increases in social investment are desirable, they are not in themselves a guarantee. The challenge of achieving a balance between meeting social needs and the country's fragile financial situation prevails. The 2021 National Budget has serious distortions, and must be redrafted according to FUSADES.

According to the institution, there were shared responsibilities in the failures during the budget process. The Executive is in charge of preparing it, but the Legislative must review it. In this process, both institutions neglected elements related to institutionality, fiscal sustainability and people's welfare, and development.

There was also a legal breach. Since the budget is unconstitutional as it is underfunded and fails to comply with the principle of universality, the principle of budgetary balance and the ruling of the Constitutional Chamber (2017). It is also not congruent with the Fiscal Responsibility Law.

The fiscal deficit is too high and the debt trajectory is unsustainable. In addition, it is an expansive budget in expenditures that does not consider the necessary financing.

The approval of this budget increases the country risk and the probability of default, which generates economic and social instability. It is not a budget for economic and social development with inclusion. In this regard, five challenges stand out that call into question the adequacy of social investment and the efficiency in the use of resources for its implementation:

These challenges could affect the quality of life of salvadorans, according to the institution, due to limits in the availability of State resources that call into question the sustainability of social investments. For example, maintaining the current system of health scales without revision implies annual salary increases which would be difficult to sustain given the current financial conditions, and could also lead to future reductions in other important areas, such as vaccines and medicines, in order to maintain such increases.

Problems accentuated by the COVID-19 pandemic, such as learning backwardness, school dropout and inequalities in access to education are not properly addressed in the budget. Other issues that were already pressing even before, such as local development, have suffered a decrease in the amount of resources allocated to them.

Projects such as the investment in computers for students in the public system raise doubts about their feasibility and cost-efficiency. No consideration has been given, for example, to the access to energy or internet available to the people who will receive these computers. Nor has there been any evaluation of the capacities of both teachers, and students to effectively take advantage of these tools in an educational context.

The dispersion of resources among different agencies dealing with local development (FISDL, ISDEM, Ministry of Local Development, Ministry of Government and Territorial Development) duplicates administrative expenses that consume funds that could be better used for investments in the field.

Public ignorance of the plans that support social investment, such as the Social Development Plan, the Education Plan and the National Health Plan, means that the objectives of the projects that are carried out are unknown, whether these really contribute to their achievement or whether there are better ways to achieve the desired results.

One of the recommendations made by FUSADES is to promote a constructive dialogue between the Executive and Legislative Bodies to redo a budget that complies with the Constitution, respects the jurisprudence and promotes the development of the country and the improvement of the quality of life of salvadorans.

Also, prioritize a social policy, centered on people, that gives equal importance to social protection, sectoral policies and social promotion measures and define national plans and strategies with clear delimitation of their scope and the roles of the institutions involved.

Establish priorities to make efficient use of limited resources and carry out technical and financial pre-feasibility assessments of the social policies to be implemented.

Define technical criteria for the delivery of social benefits in order to avoid inefficiencies or political clientelism and thus strengthen the implementation capacities of public institutions.

Demand transparency, accountability and knowledge of the strategic planning of social investment, and guarantee access to public information related to social investment.

Last modified on Monday, 22 February 2021 21:19