ISLAMABAD: Pakistan's social spending is both inefficient and not enough, and should give priority to addressing spending efficiency before increasing its level to maximise impact per dollar spent, says the International Monetary Fund (IMF).
The IMF in its latest report, "Social Spending for Inclusive Growth in the Middle East and Central Asia" stated that there was scope to increase the efficiency of public health care spending in the region.
This is especially the case in Kazakhstan, Kuwait, and Pakistan.
"Lebanon, Mauritania, Pakistan, and Tajikistan are not spending enough and could see their gross school enrollment and expected years of schooling rise with larger education budgets. In countries that are spending both inefficiently and not enough (Mauritania, Pakistan, Qatar), priority should be given to addressing spending efficiency before increasing its level to maximize impact per dollar spent," it added. As countries that are efficient but are not spending enough increase their level of spending, they may witness a decrease in their efficiency scores due to diminishing marginal returns. Indeed, we find evidence of decreasing returns to scale. Therefore, any additional spending needs to be calibrated in a way that preserves efficiency and achieves better outcomes per dollar spent.
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