GPE/Chantal Rigaud

Breaking out of the bubble to transform education financing

By David Archer

A year ago, the Transforming Education Summit (TES) was the highest-level education meeting in history, convening Heads of States on an unprecedented scale to talk about the education crisis. I was the Stakeholder Convenor for the finance track of the summit, helping to draft and edit the TES Discussion Paper on Financing, which was developed with input from 193 UN Member States. The paper led to the development of a Call to Action on Financing Education endorsed by the UN Secretary General, that was launched at the Summit on 19th September 2022.

One year on, it is clear that delivering on this transformative finance agenda will be key to achieving the Sustainable Development Goal on Education by 2030. But to make the necessary breakthroughs, the education community, at national and international levels, must break out of its bubble and engage in much more strategic dialogue and action around tax justice, debt justice and ending the  default use of austerity measures.

The Global Partnership for Education (GPE) is the most influential global actor on education, linking ministries of education from across lower-income countries in a partnership with bilateral and multilateral donors, civil society representatives, teacher unions, private sector partners and foundations. New research published today, shows the scale of transformation that could be achieved through action on the TES recommendations on tax, debt and austerity in 89 partner and eligible countries of GPE.

Taking action to increase tax revenues

On tax, the TES finance agenda called for action nationally to ‘increase the fiscal space for education’ and ‘to reach an adequate tax-to-GDP ratio.’ TES also called for international support to ‘prioritize global actions on taxes supporting international reforms.’

Our new research shows that GPE partner countries are losing over $47 billion every year in potential tax revenue, largely owing to tax avoidance by the wealthiest companies and individuals. It also reveals that 70% of GPE partner countries have a low tax-to-GDP ratio (under 20%), meaning that they struggle to raise enough revenue to provide universal education.

If these countries increased their tax-to-GDP ratios by five percentage points (as deemed realistic in a key IMF paper on financing sustainable development), they could raise an additional $455 billion. Moreover, if a fair share of this sum was earmarked for education, they could mobilize over $93 billion for education every year. This would be enough to transform the financing of public education, for example covering the costs of primary education for over 88 million children.

Reducing the debt burden to allocate more funds to education

On debt, the TES Finance Paper called for urgent action, observing: ‘It is clear that action on debt renegotiations and even debt write-offs for countries in debt crisis urgently needs to be accelerated. Any country that spends more on debt servicing than on education ought to be prioritized.’

The new research shows that 90% of the countries studied are at significant risk of debt distress (either they are in debt distress or at high or moderate risk of distress), seriously limiting the funds available for education. Indeed, shockingly, 25 countries are spending more on servicing their external debts than they are on education. Yet even in these countries, education is still not being factored into national negotiations on debt – and education still has little voice in global discussions on the debt crisis. GPE has started to acknowledge the importance of action on debt through its Debt2Ed modality but a much greater strategic engagement is needed in every country where the scale of debt servicing is limiting spending on education.

Cutting public spending reduces education budgets

On austerity, the TES Call to Action on Finance urged ‘the International Monetary Fund (IMF) and other international financial institutions to remove existing obstacles, such as public sector wage constraints, that prevent increased spending on education; and champion policies that will allow significant new recruitment of professional teachers wherever there are shortages.’

But the latest data shows that 75% of countries are planning to cut overall public spending as a percentage of GDP over the coming three years. Moreover, in 36 countries where intensive studies have been conducted to look at the IMF policy steer on public sector wage bills, 67% of countries have been advised to cut wage bills and 28% have been advised to freeze them. This directly blocks recruitment of new teachers, even in countries where there are serious teacher shortages; and squeezes teacher salaries even where teachers are on low pay. Yet the IMF still does not engage in a systematic dialogue with education actors to discuss the impact of its advice on education.

Bold action is needed by all education stakeholders

All this must change! A year on from TES, our new research (published in the policy brief: Breaking Out of the Education Bubble) has exposed clearly that strategic action on tax, debt and public spending policies is essential for any government committed to achieving education goals. Governments should use all the tools at their disposal to act on progressive tax reforms, debt justice, and moving away from austerity policies.

But national action needs to be reinforced internationally. We urge all GPE partners, in line with GPE’s ambitious strategy, to leverage the power of its partnership for system transformation, to think out of the box and move in the bold directions proposed at TES. GPE, as the largest partnership for education, should support both national action and international reforms to deliver on this transformative agenda.



Leave a Reply