Informal sector and gender-responsive budgeting: Key to effective social spending

THIS week, the International Monetary Fund (IMF) announced a staff-level agreement with Sri Lanka for the fourth review under the Extended Fund Facility (EFF) potentially unlocking another $ 344 million in financing.

- Maya Karunaratne

Amongst energy pricing and tax reforms, social protection remains a commitment under the IMF's fourth review. However, the integration of gender-specific considerations, particularly the inclusion of women, within the IMF's bailout program has been limited and could be the key to missed targets.

Under the EFF arrangement, the IMF does emphasise the need to protect vulnerable communities by enhancing social safety nets and ensuring a minimum level on social expenditure. The February 2025 review noted that Sri Lanka missed the indicative target on social spending, highlighting challenges in meeting these commitments. This week too, the IMF acknowledged that "it is important to redouble efforts to improve targeting, adequacy, and coverage of social safety nets" to protect vulnerable populations during this recovery phase. Yet, despite the broader strategy which acknowledges the role of social spending in addressing gender inequality there is limited evidence of explicit measures targeting women's inclusion within the Sri Lankan bailout program. This oversight could contribute directly to shortcomings in meeting set social protection targets, as women disproportionately bear the brunt of economic instability.

Especially considering external shocks such as US tariffs impacting key sectors like apparel, which employs a significant number of womenthere is a critical need for Sri Lanka to focus on enhancing social safety nets with particular attention to gender. Actively integrating women into policy formulation, decision-making processes, and the implementation of social protection programs has been proven to increase the resilience and adaptability of these sectors. Ensuring women's meaningful inclusion is not merely a matter of equity, but it is a strategic imperative to fully realise the goals and targets set by international financial institutions and national recovery strategies alike.