COVID-19 had significant impact on education financing

The 2022 Education Finance Watch (EFW) was published today at the Transforming Education pre-Summit. It is a collaborative effort between the World Bank, the Global Education Monitoring Report and the UNESCO Institute of Statistics. It aims to provide an annual analysis of trends, patterns and issues in education financing around the world. The EFW 2022 sheds light on the impact of COVID-19 on global education financing in 2020, 2021 and 2022 with substantially more data than used in the EFW 2021. This blog presents the key findings from today’s release.

The pandemic’s impact on global learning losses is large and unequally distributed, between and within countries. Most countries continued providing learning opportunities, by partially reopening schools or through remote or hybrid teaching. But these efforts were an imperfect substitute for classroom teaching and in low- and middle-income countries they did not reach all students; sometimes they only reached a minority of students.

It is estimated that global learning losses from COVID-19 could cost this generation of students close to US$21 trillion in lifetime earnings, which far exceeds the original estimate of US$10 trillion, made immediately after the pandemic outbreak, and even the US$17 trillion estimated in 2021.

In many countries, the crisis implied significant mid-year budget revisions. To alleviate the abrupt impact on economies, address emergency needs, and provide fiscal stimulus, additional resources were mobilized through different means, but education systems struggled to garner additional financial support, or to adapt to the crisis.

Total global education spending in 2020, the first year of the COVID-19 pandemic, remained on par with 2018 and 2019, at US$4.9 trillion, but with significant differences in spending in different country income groups. Spending increased in high-income countries, driven by higher public spending, and in low-income countries, driven mainly by external aid. By contrast, it decreased in middle-income countries by US$35 billion.

In a panel of countries with data on both years, the number of countries that reduced their year-on-year spending on education increased from 28% in 2019 to 51% in 2020. Approximately 41% of low- and lower-middle-income countries reduced their spending on education after the onset of the COVID-19 pandemic, with an average decline in spending of 13.5%.

Education has not recovered its lost share in government budgets, which remains lower in 2022 than before COVID-19 in lower income countries. By contrast, in higher income countries, education as a share of total government budgets is now higher in 2022 than it was in 2019.

Per capita government spending on education was higher in all regions in 2019-2020 than in 2014-2015, except for Latin America and the Caribbean. However, there is considerable variation among countries: one-third of lower-middle-income countries and half of upper-middle-income countries spent less per capita on education in 2019-2020 than they did in 2014-2015. Government per capita spending in sub-Saharan Africa (US$254) and South Asia (US$358) is less than one-tenth of per capita spending in Europe and Central Asia, and less than 5 percent of per capita spending in North America.

Although total aid to education reached a record high of US$18.1 billion in 2020, an overall increase of 15% from 2019, this increase was largely driven by budget support to countries aimed to help manage the impacts of the COVID-19 pandemic, rather than by aid directly targeted at education. Overall, bilateral donors decreased their aid to education by US$153 million from 2019 to 2020. Moreover, dealing with the aftermath of COVID-19, the wars in Afghanistan and Ukraine, and their consequences means that more donors are shifting their priorities away from aid and away from education. At least four major donors in education have announced significant cuts in their direct education official development assistance.

A neglected aspect of education financing is that households in low- and lower-middle-income countries bear 39% of the total cost of education compared to just 16% in high-income countries. Moreover, within countries, the richest spend far more on education, further entrenching inequality: in 33 low- and middle-income countries, households from the richest quintile spent 4.2% of their budget on education compared to just 2.4% among households in the poorest quintile.

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