Details

Subject(s)

• Human capital [Browse]

Series

Policy research working papers. [More in this series]

Summary note

To face a debt crisis, countries often implement various forms of fiscal consolidation policies aiming at addressing fiscal imbalances. This paper investigates how debt and fiscal consolidation could influence government expenditure on education. It shows that increased external debt is associated with a higher risk of fiscal consolidation, which may contribute to a decline in education expenditure. A 1 percent increase in external debt is associated with a 1.4 percent decline in education spending per school-age child. Given the rising debt levels fueled by the COVID-19 response policies, a decline in education expenditure is to be expected in the post-pandemic era. For instance, in low- and middle-income countries, a 5 percent increase in the external debt could lead to a USD 12.8 billion decline in the volume of education expenditure, all things being equal. This decline is almost equivalent to the volume of official development assistance to the education sector in 2021. The paper sounds the alarm bell for the potential impact of COVID-19-related debt on education financing.

Bibliographic references

Includes bibliographical references and index.

Source of description

Description based on publisher supplied metadata and other sources.

Other standard number

• 10.1596/1813-9450-10475

Statement on language in description

Princeton University Library aims to describe library materials in a manner that is respectful to the individuals and communities who create, use, and are represented in the collections we manage. Read more...