Besides affecting the private sector,the current global economic downturn will likely have afar-reaching impact on government revenues around the world.As country budgets are squeezed tight, social programs whichdirectly help poor and vulnerable people will becomepressure points for reducing government spending. In manycountries in Eastern Europe and Central Asia (ECA), twoyears of rising food prices, high energy costs and theglobal economic downturn have combined with other shockslike natural disasters and political instability. Theimpacts of these crises could reduce government revenues andaffect social spending and pension systems, even as the needfor unemployment and benefits increases. In the short run,ECA countries may call on the World Bank to providefinancial or technical support to help with the immediateimpacts of the crises. Rapid support could include: (a)helping countries finance temporary scaling-up ofwell-targeted safety nets, either in beneficiary coverage orwith a topping-up of benefits values; and (b) supportingactions to protect the budgets of well-targeted programs andother crucial spending on education and health. Governmentsand the Bank need to be prepared to respond more adeptly inthe future; safety nets are important not only in times ofcrises but, in the long-run, they help to protect the poorand allow governments to avoid other, more costly orinefficient policies.
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