Covid-19 – Building State Capability

RISE Launches Interactive Data Visualisations Estimating Long-Term Learning Losses from COVID-19 School Closures

Guest blog written by Carmen Belafi

COVID-19 will exacerbate the learning crisis. Causing schools to close around the world, the pandemic disrupted education as we know it. But the COVID-19 shock to education systems will likely cause severe and long-term learning losses that are far bigger than the ‘mere’ time schools were closed. Learning losses can continue to accumulate after children return to school.

It is important to estimate long-term learning losses

Research following the 2005 earthquake in Pakistan shows how the long-run effects of school closures can compound over time. When schools closed for 14 weeks following the disaster in Pakistan, learning losses were far more severe. Four years after the earthquake, children were 1.5 years behind their unaffected peers, far more than the 14 weeks of school they originally missed. Learning losses can far exceed the actual school closure time if no mitigating action is taken, multiplying an initial short-term learning loss into significant long-term losses.

The same will be true for COVID-19. Modelling the impact of school closures on children in Grade 3, Michelle Kaffenberger shows how an initial three-month school closure could build up to more than a year’s worth of learning by Grade 10 if no mitigating action is taken. This is because many students had already fallen behind before the pandemic caused schools to close, as curriculum and instruction were too ambitious to have all children keep up. And even school closures themselves will likely exacerbate inequalities—not only because solutions for remote learning vary a lot in quality and effectiveness, but also because students from lower socio-economic backgrounds do not have the same household support and access to remote learning options (especially those that require electricity or internet). Hence, differences in learning based on household characteristics are likely to widen during school closure times.

But the outcomes do not have to be so grim. Combining short-term remediation with long-term reorientation of instruction and curriculum to better align with children’s learning levels not only has the potential to fully mitigate learning losses, but to improve learning outcomes beyond what was to be expected under the ‘business as usual’, counterfactual scenario where the world never experienced COVID-19.

Leveraging Technology to Improve Forecasting and Monitoring of Local Government Budgets

Guest blog written by Ruth Huette

Public budget uncertainty is a defining characteristic of the COVID-19 pandemic

Last week, governments of France and Germany announced that their countries would enter yet another phase of lockdown as new cases of COVID-19 were on a steep rise again. As Europe is grappling with a second COVID wave, other governments around the world are expected to make similar announcements soon.

Although long expected by epidemiologists, the announcement took many smaller and medium sized companies by surprise. To help ease the impact on businesses forced to close during the lockdown, Germany’s finance minister, Olaf Scholz, promised that the government would compensate small firms with up to 75% of their revenue for the same time last year, thereby tearing yet another hole into already diminished public budgets. Not only in Germany but around the world have local governments taken a massive doublet hit in their budgets since the start of the COVID-19 pandemic, as tax revenues went down and social spending and economic support increased. Until a vaccine will be developed and widely distributed, this uncertainty on future public budgets will persist.

Data analytics can improve local government budgeting processes

To prepare for future phases of budget uncertainty local governments should take advantage of technology and replace manual processes and basic tools with specialized analytics systems. This will help them enhance prediction accuracy, improve data exchange between different government units, facilitate budget-related decision making through visualization and increase citizen participation in budgeting.

Enhancing the accuracy of forecasts

Already in normal times, local budgeting requires bringing together many moving parts – during a global pandemic even more so. In a time of unprecedented uncertainty, both short- and long-term local financial management has become ever more complex. Public health and safety predictions, complex economic scenarios, and accompanying public social spending forecasts are new sources of information, among others, that must now be incorporated into robust budget planning analyses. With increased complexity, manual manipulation of spreadsheets is even more prone to errors and can be difficult to replicate. Advanced data analytics tools offer the potential to improve government’s ability to extract value from various sources and large volumes of data.

Breaking up siloed data and coordinating systems

Data silos in budgeting can be the result of limited insights which the various institutions that help inform the budget planning process gain from their traditional Excel spreadsheets and ERP reports. During crisis times, even more and potentially unusual data sources from various sources need to be taken into account – including for example forecasts of future COVID-19 cases, of required government measures to curb the spread and of the measures’ expected impact on small businesses. This further complicates data transmission and analysis and increases the risk of loss of relevant information.

COVID Budgeting – Fiscal Response and Challenges

Guest blog written by Imaad Syed

Most governments across the world responded to challenges of the COVID-19 pandemic through fiscal and monetary support measures. Coordination and implementation issues aside, these measures have been instrumental in saving lives and livelihoods in the short-term. However, budgeting challenges remain given the massive outlays for the COVID response. In this blog post, we briefly overview the scale of fiscal response, types of fiscal measures, and budgeting challenges ahead.

Distribution

National governments were quick to deliver significant fiscal stimulus packages in response to the economic crisis due to coronavirus lockdowns. These packages varied in size and location (Figure 1). New Zealand had the largest fiscal response of any major country at 19.5% of its GDP (second overall behind Tuvalu at 29%), followed by Singapore (16.1%), Canada (12.5%), and the United States (11.8%).[1] Approximately 70% of countries had a fiscal response of 5% of their GDP or lower (Figure 2). Lesotho had the largest fiscal response among countries in Africa at 10.2% of its GDP, while United Kingdom (9.2%) and Chile (8.4%) had the largest fiscal response in Europe and South America, respectively.

Figure 1: Map of global fiscal response to COVID. Excludes Tuvalu to highlight differences among countries. (Source: IMF)

Figure 2: Distribution of global fiscal response to COVID (Source: IMF)

Measures

The fiscal response to COVID has largely centered around relief for taxes and fees, employment incentives, and economic stimulus.[2]

Taxes and fees relief: Most governments have extended filing deadlines and reduced tax rates to provide relief to individuals and businesses. Other measures include:
- Deferring tax installment payments and writing off interest on late payments
- Extending payroll tax exemptions and deferring sales tax remittances
- Suspending increments in government fees and charges
- Increasing corporate tax thresholds and rebates
- Removing import tariffs on critical medical supplies

How Should Governments Manage Budget Cuts of 20% (or more) in 2021?

written by Matt Andrews

50 participants in 36 countries completed our informal survey

The months of October, November and December are commonly busy in City Treasuries, Provincial Budget Bureaus and Ministries of Finance across the world. This is the time of year when these officials are finalizing their budget proposals and are getting ready to present the proposals to political representatives.

More often than not, one expects to see revenue and expenditure plans for next year that resemble the year before—with some incremental changes to reflect inflation and other expected and programmable influences on revenue availability or policy need.

Budgeting for 2021 will look very different, creating an immense challenge for budget officials. In a recent informal survey, we at the Building State Capability Program asked such officials about this challenge.

The questions in the survey asked what respondents expected with respect to revenue and expenditure estimates next year. A good number responded ‘I don’t know’, explaining that there were still too many questions to answer, like:

‘will we find a COVID-19 vaccine?’
‘if so, how much will the vaccine cost?’
‘will we be able to increase fiscal space?’
‘will international organizations provide more funds?’
‘can we renegotiate our debt?
‘will the economy grow?’
‘will tourism (and revenue from tourism) rebound?’
‘can we unwind government supports to firms, the unemployed and other citizens?’

These questions are incredibly difficult to answer, and in many cases, unanswerable for 2021 (and perhaps even beyond). This makes it incredibly difficult to estimate revenues and expenditures moving ahead. But budget plans must be written, negotiated, and finalized. How should this be done?

For respondents who described their revenue and expenditure estimates, regardless of these unknowns, the numbers were sobering. As shown in the bar graphs below, estimates in different contexts covered quite a range – but all were negative (such that everyone expects decreases in revenue and expenditure next year).

The majority of estimates from our (admittedly unscientific) survey suggest that revenue shortfalls and expenditure cuts will be well above 20%. This means that governments expect to raise 20% (or more) less revenue next year than they did in 2020 (which was already a tough year). And governments expect to decrease expenditures by 20% (or more) in 2021. How should this be done?

Will Government Budgets in 2021 involve more COVID-19 ‘Whack-A-Mole’?

written by Matt Andrews

Governments started 2020, as they do every year, with budgets that set out plans for raising and spending public money. Then COVID-19 hit, disrupting even the best laid plans and forcing officials to shift from planning to triage mode in the face of rapidly changing crisis conditions.

According to a recent informal survey we conducted, with 48 respondents from across the world, the COVID-19 effect is generally widespread and significant:

Over 75% of respondents noted that their governments faced growing spending needs, which required revisions on the spending side of most budgets.
Over 90% of respondents noted that their governments faced declining revenues, which necessitated urgent efforts to access funds and fill gaps.
Over 90% of respondents noted that public sector deficits grew in the year, which called for changes in fiscal policies, norms and even rules in many places.

These pressures turned 2020 into a series of constant budgetary revision and re-negotiation in most governments. Some officials I was in contact with, described the experience as frustrating and exhausting; they were never able to keep up with all the problems that emerged.

In a sense, managing public finances in 2020 was like a long game of ‘whack-a-mole’.

Now, in late 2020, governments need to think about how they budget for 2021 (and beyond) hoping that they can plan more effectively given what they now know about the impacts of COVID-19.

Stated differently, can they budget in a way that fosters less COVID-19 ‘whack-a-mole’ in 2021?

We at the Building State Capability program are intent on helping in this process, by offering ideas about how governments can foster more stability in 2021 – both by preparing their 2021 budget plans differently and by developing strategies to engage with emerging pressures to those plans throughout 2021. We will offer a few blogs on this in the coming weeks – as many governments are in the final throes of preparing their 2021 plans – and will hold a one week executive education program on budgeting through crisis from October 26th to 30th, 2020.

We have some amazing faculty members contributing to the executive program:

My colleague Ricardo Hausmann will address – among other things – ways of thinking about the macro-fiscal uncertainties associated with COVID-19 and the difficult trade-offs governments are being forced to consider at this time (read some of his views in this blog)
Teresa Curristine, the Deputy Division Chief in the IMF’s Fiscal Affairs Department, will lead a session on the difficulties of budgeting in a time of COVID-19 (see a blog on the topic she recently co-authored here).
Louise Sheiner, Policy Director of The Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, will address challenges in the United States context and speak to the tensions involved in programming different kinds of social expenditures at this time (see a recent related blog here).
Sandra Naranjo Bautista, former Secretary of Planning and Interim Vice President in Ecuador, will share her personal experience leading the public finance response to Ecuador’s 2016 earthquake, including discussing the challenges associated with leadership at this time (something she references in two recent blogs, here and here).
Paolo de Renzio, Senior Research Fellow for the Open Budget Initiative at the International Budget Partnership, will reflect on the importance of communications, transparency and partnerships in developing and managing public budgets at this time (a topic he discussed in this blog).

If you, or anyone you know might be interested in participating in this program, please share this link with them. We would love to have you join us.

If you can’t join the program, watch for more blog posts on the topic!

COVID-19 is Poised to Exacerbate the Learning Crisis, Evidence from Long-term School Closures in Pakistan

written by Marla Spivack

The consequences of the COVID-19 pandemic and of the policies adopted to mitigate its spread will be drastic everywhere and particularly grim in low- and middle-income countries.¹ As economies shrink, up to a decade of progress in poverty reduction could be undone. As health systems struggle, millions could go without treatment for preventable infectious diseases and childhood vaccination rates could plummet. And as schools are shuttered, millions of children will fall further behind in school with devastating effects on their outcomes later in life.

A leaky roof is a small problem on a sunny day and a big, urgent problem on a rainy one. The COVID-19 pandemic is not just a rainy day for education systems in low- and middle-income countries, it is a one-hundred-year flood. A new paper from the RISE Pakistan Country Research Team (CRT) shows that children in these countries are especially vulnerable since they are embedded in already dysfunctional education systems. The paper also shows that some of the worst damage to children’s long term learning from these closures may come after schools start up again. If children have fallen behind, they may never catch up even after they return to school.

New study of the learning effects of the 2005 Pakistan Earthquake has important lessons for COVID-19 related school closures

In the paper, RISE Pakistan Team members (Tahir Andrabi of LUMS and Pomona College, and Jishnu Das and Benjamin Daniels of Georgetown University) use a survey conducted four years after the 2005 Pakistan earthquake to measure how the disaster affected children’s learning and other human capital outcomes.

The 2005 earthquake was severe, with an epicenter in the Himalayan region, it registered 7.6 on the Richter scale, caused more than 80,000 deaths, and destroyed the vast majority of infrastructure in the area. As a result, children were out of school in the affected areas for an average of 14 weeks.

The researchers studied the effect of the school closures on children’s learning, and the findings have important implications for how we can expect the COVID-19 related closures to affect learning outcomes for children in education systems with similar constraints to Pakistan’s—and what can be done to mitigate these effects.

If countries reopen to business as usual, short-term school closures can produce outsized, long-run learning loss

The results of the paper add further evidence to the established finding that interruptions to human capital accumulation due to disasters can be severe. In this case, they show that the disaster can leave long-lasting scars on children, even when government interventions compensate households for the shock and facilitate a speedy economic recovery.

Four years after the earthquake, school enrolments had fully rebounded, infrastructure had been rebuilt, household incomes had rebounded, and adult’s health outcomes had returned to pre-quake levels, but children were still suffering the effects of school closures. Test scores of children in the affected areas put them 1.5 to 2 years behind their peers in unaffected. This lost learning could result in children earning 15% less in every year of their adult lives.

Losses to human capital may well continue to accumulate further after children return to school, if they fall behind and are not able to catch up with the curriculum. Children fall behind, the over-ambitious curriculum races ahead, and children can’t catch up. In the aftermath of the earthquake, Andrabi et al find that school closures accounted for only 10% of the gap in test scores. Much more was lost after children returned to school. This is likely because children fell behind the standard curriculum during the closure period and then failed to catch up. This reinforces findings from RISE work in India which shows that when children fall behind in school they struggle to catch up later, due in part to overambitious curricula.

If steps are not taken to prevent children from falling farther behind when they return to school, the crisis will likely further exacerbate inequalities

Many commentators have noted that COVID is likely to exacerbate inequalities. The findings from the aftermath of the earthquake suggest that long term school closures can reduce inter-generational educational mobility. Andrabi et al found that in the aftermath of the earthquake children with educated mothers were fully able to fully catch up with their peers from unaffected areas. This finding is troubling considering pre-COVID work from the RISE Ethiopia CRT, which shows that first generation learners are already among the most disadvantaged in terms of learning outcomes.

Pedagogical approaches that focus on teaching children where they are will be critical to averting permanent learning deficits

The compounding of learning loss that was seen in the years following the earthquake in Pakistan suggests that assessing children when they return to school and teaching them from where they are will be vital to mitigating the long-term effect of school closures. The effectiveness of approaches like these often called teaching at the right level, have been well established. When they reopen, school systems should leverage approaches like these, and focus on helping children catch up and solidify their basic skills.

Reopening to business as usual would compound the disastrous effects of the COVID related closures. This catastrophe can be avoided if education systems embrace the opportunity to take on systemic changes, as part of their response to the crisis.

Footnotes

¹ Incidentally, the May 23 edition also includes a laudatory and well deserved profile of RISE Nigeria CRT PI Leonard Watchekon and RISE implementing partner African School of Economics, which Watchekon founded.

This blog first appeared on the RISE blog.

New Online Program: Budgeting in a Time of Crisis

Governments across the world are facing a major budgeting crisis in 2020 due to the COVID-19 pandemic. This crisis raises important questions:

How do governments manage revenue shortfalls?
How do you address new expenditure demands?
How do you forecast in the presence of multiple uncertainties?

All of these questions, and more, need to be addressed in the few months governments have left to develop their 2021 budgets. However, many of the processes and approaches to budgeting do not hold in this current circumstance. This means that new techniques and methods for budgeting in times of crisis are necessary.

Budgeting in a Time of Crisis, a new executive Education program at Harvard Kennedy School taught by Matt Andrews and Ricardo Hausmann, garners lessons from past crises, as well as cutting-edge thinking about the COVID-19 situation, to offer budgeting professionals new ideas and perspectives to apply in developing 2021 budget proposals.

These ideas relate to technical and political processes of delivering a budget (how do you forecast and build a budget technically in this trying time AND how do you communicate and engage with others about this budget) and also to the challenge of implementing that budget in coming years (what kind of flexibility might you need, what information do you need to collect, how can you manage expectations). To learn more, visit the course page.

Listen to Faculty Chair, Matt Andrews discuss the online program.

Charting a new course: Education systems after COVID-19

Written by Dzingai Mutumbuka and Marla Spivack

An ordinary classroom in an African school.

We know that time away from school due to COVID-19 has undermined learning. Children are depending on education leaders – from high level officials to classroom teachers – to start planning now for a new focus on foundational skills. With bold action, and clear focus education systems can mitigate the long term effects of this crisis and set out on a new course towards sustainable improvement in learning.

The global COVID-19 pandemic has upended our lives and our education systems. Education has been adversely impacted in two significant ways: schools have been closed, in some cases for a whole year; and economic production, the major source of education funding through budgets, has declined precipitously. In Africa, where there was already a learning crisis characterized by millions of children out of school and for those enrolled completing primary education without minimum competency in literacy – 86% of children reach the end of primary school without basic literacy according to the World Bank – and numeracy, COVID-19 school closures have turned the crisis into a nightmare.

Insights from research on education systems suggest that by making a system-wide commitment to prioritizing foundational skills, assessing children’s learning levels when schools reopen, and adapting instruction to children’s learning levels, education systems can mitigate learning loss and even come back stronger than before.

Several features of the learning crisis set the stage for COVID-19 school closures to severely impact long-term learning outcomes. Learning profiles in African countries are flat, meaning that children acquire little new learning with each additional year in school. Many fail to master foundational skills early on and then struggle to keep up or catch up as the curriculum progresses. For children who learn little during school closures, catching up will be even more challenging. Learning levels in classrooms can vary widely and are likely to likely to increase in the aftermath of COVID-19 closures.

COVID-19 closures are also poised to exacerbate learning inequality. The majority of children in African countries do not have access to virtual learning, but those that do are likely to be urban and better off. Better off children are also more likely to have parents who can support and supplement remote learning from the school system.

COVID Act Two: Look beyond your borders to navigate what comes next

Guest blog written by Peter Harrington and Ben French

Act One of Covid is over. In places it has been frightening, in others orderly, and everywhere completely unprecedented. As we move into Act Two of this astonishing global drama, and a global recession on a scale not seen before, governments and leaders need to prepare themselves for what comes next and the big questions that will define whether countries sink or swim.

A defining feature of Act One was the seeming uniformity of the pandemic. It felt like the whole world was brought together by a shared experience – fighting a merciless enemy that swept the world and respected no language or national boundary. This feeling was also often matched by a striking uniformity of response – regardless of context, governments in almost every country pulled the lockdown lever to suffocate and slow the virus.

With the curtain coming down on Act One, we find ourselves wondering: was this uniformity of experience real or imagined? It may have been a mirage. Looking closely Act One has been a vastly different experience across countries. Whereas Europe and the US have seen massive caseloads, the predicted tsunami in Africa has yet failed to materialize, even after acknowledging the lack of data. In other places like Pakistan or Indonesia the crisis looks set to smoulder, with periodic flare ups. This divergence belies the impression of uniformity – an impression that may have had more to do with where headlines are generated than any true homogeneity of experience. The reality of Covid has been extremely heterogenous.

This brings us to Act Two. So far, the policy debate has focused on how to manage the pandemic and economic shocks. The result has been a narrow focus on managing the pandemic and its economic consequences in the present, and within countries’ own borders. As governments move into the recovery phase and start thinking about the subsequent waves, a more nuanced view of the evolving situation must take hold.

In the early stages of this crisis, it was the hyper-connected parts of the world that were impacted most. The more connected a country and its economy were to the rest of the world, the higher and faster the caseload. This is common sense – places with a huge through-traffic of travellers and visitors (like London, New York, Hong Kong), and more infrastructure, had far greater probability of transmission than Lilongwe or Lapland. In Act One, interconnectedness was a risk factor – it created vulnerability as travellers, tourists and flights became disease carriers. And to compound things, interconnected economies have suffered more initially – from loss of exports, loss of remittances, loss of investment. Meanwhile, those places with less inter-connection were sheltered from the storm, or at least suffered a slower spread. Continue reading COVID Act Two: Look beyond your borders to navigate what comes next

Listen to our sixth virtual discussion on Leadership Through Crisis

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On May 1st, 2020, we hosted a sixth virtual discussion with Matt Andrews, who answered audience questions on his new Public Leadership Through Crisis blog series.

Thank you to ALL those who attended our sixth session and for engaging with us. If you missed the session, you can listen to it here or in the player below.

BSC’s new Public Leadership Through Crisis blog series offers ideas for leaders questioning how they can help and what kind of leadership is required in crises. Each blog offers a few ideas as well as questions for reflection, thus creating a space for learning and contextual reflection.