In a new Malala Fund policy brief, we argue that debt sustainability analysis must treat education as macrocritical, and set out four steps for economic policymakers to get there.
In 113 countries, home to 6.1 billion people, governments now spend more on servicing debt than on educating their children. Our new policy brief, Education as macrocritical, shows how the impacts of this squeeze falls hardest on girls and why it should concern economic policymakers.
Across the 10 countries where girls face the greatest education challenges, debt service rose from below 6% of government expenditure in 2012 to 17% today, while education’s share fell from around 15% to below 12%. As budgets tighten, teacher numbers fall, school fees rise and families under pressure are more likely to pull girls out of school than boys. That loss carries through to future earnings, labour force participation and the tax revenues on which a country’s capacity to repay debt ultimately depends.
The frameworks used to judge whether debt is sustainable capture the immediate savings from cutting education while missing the slower erosion of human capital that follows. Our review of 25 recent IMF Article IV consultations found that only two analyse how education affects growth or fiscal sustainability, and none tests education spending against internationally agreed financing benchmarks.
The brief calls on ministries of finance, the IMF, the World Bank and governments involved in debt restructuring to measure education investment, model it in debt sustainability analysis, protect it in programme design and restructure debt where protecting it within the available fiscal envelope is impossible.
As the brief concludes, no debt path is sustainable if it is financed by the futures of girls.
