Despite the fact that the republic is officially designated in its constitution as a “welfare state,” it still fails to satisfy basic needs of its citizens and ensure their decent standard of living.
For the state to be deemed the citizen-focused state, it should allocate a certain interest in the country’s revenue to the social welfare sector, which varies depending on various factors such as economic development of the country, social needs, political priorities and social values.
However, many experts believe that the country must allocate at least 20-30 per cent of its GDP (gross domestic product) to social expenditures to be deemed the welfare state. It includes spending on education, healthcare, social welfare, housing and other services for citizens.
5.5 times below WHO recommendations
One of key indicators of the welfare state is its ability to provide access to quality healthcare services. However, the healthcare system in Kyrgyzstan is underfunded and is lacking adequate resources, which leads to low quality services.
This year, Kyrgyzstan plans to spend 8.8 billion som (nearly 100.5 million dollars) to healthcare system. Even though, expenditures in this sphere were increased by 859 million som (9.8 million dollars) in 2023. Thus, healthcare expenses will amount to 2.3 per cent of total expenditure of the republican budget, or 0.9 per cent of GDP.
This amount is insignificant, especially taking into account that healthcare expenditures include expenses for medical goods, equipment and hardware, outpatient services, hospital services, healthcare services, etc.
Moreover, according to the ministry of finance, increase in budget allocations is mainly related to funding of gradual increase in wages.
The WHO-recommended indicator of healthcare expenditure is 4-5 per cent of GDP. It is 5.5 times more than Kyrgyzstan is going to spend this year.
The most widespread consequences of the shortage of investment to healthcare system are high rates of infant mortality, low life expectancy rate, and high prevalence of infectious diseases.
Better, yet not enough
Another important aspect of the welfare state is its ability to provide quality education. However, the sector of education faces the same problems as the healthcare sector in Kyrgyzstan.
This year, Kyrgyzstan is spending 7 per cent of GDP, or 65 billion 279.2 million som (745.28 million dollars) to education. This is 23 billion 215.9 million som (265.05 million dollars) more than last year. However, almost all money will be spend on wages, and the remaining amount will be transferred to Batken region.
“The significant increase in budget spending can be explained by several key factors. First, salaries of teachers and some categories of education system workers have been increased. Second, budgetary allocations to Batken region. Because of the conflict at the border of Kyrgyzstan and Tajikistan, some infrastructure was destroyed and needs to be recovered,” according to the ministry of finance.
As a result, increased budgetary allocations are unlikely to have impact on education quality. This money will be spent to sustain the existing system.
+4.5 billion som for people
The government allocates 19.9 billion som or 227.2 million dollars (+4.5 billion som or 51.4 million dollars) to targeted welfare expenses (social welfare, social insurance, social security of people, issues of labour, migration, employment) in 2023.
This year, extra budgetary allocations will be used to increase the following:
- Allowance to low-income households ‘Ui-bulogo komok’ was increased by 50 per cent on average, from 865 to 1.3 thousand som (from 9.88 to 14.84 dollars);
- Additional monthly social allowance was increased from 3.7 thousand som to the subsistence level of pensioners, 5,580 som (from 42.24 to 63.71 dollars);
- Payment of services of a personal special needs assistant was increased from 4.9 thousand som to subsistence level 6.3 thousand som (from 56 to 72 dollars);
- Monthly social allowance was increased by 50 per cent on average to particular categories;
- Monthly compensation to ‘ui-bulogo komok’ was specified in the amount of 1 thousand som (11.5 dollars).
Even so, expenses for social welfare remain scanty – they don’t exceed 5.2 per cent of all budget spending or 2.1 per cent of GDP.
Cannot keep up with Scandinavia, what about EAEU?
Such countries as Denmark, Sweden and Norway, which are often set as example of successful welfare states, allocate nearly 25-30 per cent of their GDP to social expenditures. Similarly, such European countries as Germany and France allocate nearly 20-25 per cent of their GDP to social expenditures.
Moreover, developing countries with lower level of economic development have even higher requirements. They must allocate higher interest of their GDP to social expenditures in order to ensure basic social security of their citizens.
No need to go far. It is enough to compare how Eurasian Economic Union members (EAEU) allocate their income, including Kyrgyzstan, who has been its member since 2015. The data is available for nine months of 2022. They demonstrate the behaviour of member countries regarding allocation of their income.
As can be seen, Kyrgyzstan spent 31.5 per cent of its budget on general civil services, 14.3 per cent on defence and public order, and 19.4 per cent on economic issues. Meanwhile, as low as 6.9 per cent of the budget was allocated to social security, which is directly related to support of citizens.
Other EAEU members such as Kazakhstan, Russia and Armenia spent 22.6 to 31.9 per cent on social security. And it is not about their capacities. They just spend on civil services much less: 0.7-18.3 per cent.
Such spending of Kyrgyzstan could be understandable, but the republic has one of the highest poverty rates in the region. According to World Bank forecasts, it was 25.5 per cent by the end of 2022. The minimum wage in the country is one of the lowest in the region. By the end of March 2023, it was 366 dollars, which is almost half the second lowest wage in Belarus, 639 dollars.
As a result, the country has a high rate of income inequality, and small elite group has control over the disproportionate part of the national wealth.
****
Kyrgyzstan pursues the welfare policy since its sovereignty. It has adopted various programmes designed to improve the social sector. The country’s constitution enshrines the right to social security and welfare, as well as access to healthcare, education and other social benefits.
The republican draft budget for 2023 specifies that it is socially oriented. The increase in budget allocations prove it. Thus, three social spheres – education, healthcare and social security – will get extra 28 billion 450.3 million som (324.8 million dollars).
Therefore, general social expenditures will be 93 billion 961.4 million som (1.07 billion dollars) for this year, which is 28.9 per cent of all republican budget revenue (325 billion 66 million som or 3.72 billion dollars, or 35.1 per cent of GDP). The expenditure to GDP ratio is 7 per cent on education, 0.9 per cent on healthcare, and 2.1 per cent on social security.
However, despite efforts of Kyrgyzstan to become a welfare state, it still has a long way to go in order to achieve its goal. And to become the welfare state in reality, not on paper.