International Consultancy: Fiscal Analysis and Policy Advisory based on Generational Accounting - El Salvador

To examine the current situation of public finance for children in El Salvador, with a particular focus on intergenerational inequality of public debt, by applying the methodology of Generational Accounting, to provide fiscal policy recommendations including fiscal space optimisation for the future generations of children and adolescents, and to develop policy dialogues among key stakeholders in public finance among others.

If you are a committed, creative professional and are passionate about making a lasting difference for children, the world's leading children's rights organization would like to hear from you.

For 70 years, UNICEF has been working on the ground in 190 countries and territories to promote children's survival, protection and development. The world's largest provider of vaccines for developing countries, UNICEF supports child health and nutrition, good water and sanitation, quality basic education for all boys and girls, and the protection of children from violence, exploitation, and AIDS. UNICEF is funded entirely by the voluntary contributions of individuals, businesses, foundations and governments.

Purpose of the Assignment

To examine the current situation of public finance for children in El Salvador, with a particular focus on intergenerational inequality of public debt, by applying the methodology of Generational Accounting, to provide fiscal policy recommendations including fiscal space optimisation for the future generations of children and adolescents, and to develop policy dialogues among key stakeholders in public finance among others.

TERMS OF REFERENCE

1. Background

A country’s fiscal sustainability affects the a growth path, the future tax rates, the saving behavior, the net domestic investment, the labor supply, the inflation rate, the employment, the wages, the returns on capital, the integrity of its financial markets, the viability of its political institutions – indeed, it matters any issue  about a country’s future. It matters when it comes to the question on the future we are creating for our kids and whether the society is promoting their capabilities or creating an unsustainable burden.

Fiscal sustainability also raises ethical questions. If a country is spending more than it can cover with its current and future taxes, will the unpaid bills be left for today’s and tomorrow’s children? More precisely, will current adults, particularly retirees, escape the requisite fiscal adjustment because the adjustment starts when they are at the end of their lives or, even, after they die?

But understanding what is generationally fair, means to achieve fiscal sustainability first, and requires knowing what overall adjustment is needed and how delaying the adjustment will increase the size. A country’s fiscal gap – the difference between the present value of its future expenditures and its future receipts – answers this question. It measures the degree to which a country’s projected fiscal policy fails to satisfy what economists call its intertemporal budget constraint (Kotlikoff et al, 2015).

In El Salvador, constructing a sound fiscal policy for children and adolescent is one of the top priorities. According to the Ministry of Finance, in 2015 the total amount of public debt reached 64.2% of the GDP. Over the past 80 years of the country’s history, this level of such debt had never been reached, only during the civil war. Although there is still space for discussion as to whether the fiscal situation is sustainable or not, many public institutions and international cooperation agencies do recognise that the current fiscal situation in the country needs to be addressed urgently.

In 2016, the IMF suggested the Salvadorian authorities to assertively target a front-loaded reduction in the fiscal deficit of 3 percent of GDP over the next 3 years to ensure a sustainable budgetary position. Successful fiscal consolidation will require both revenue and expenditure measures, investing in a robust social safety net and reductions in distortionary taxation. A sound medium term framework will be essential (IMF, 2016).

Despite the active discussion on the current fiscal situation, there have been very few studies and initiatives aimed at analysing the impact of public debt on the future generations. As it is well known, public debt itself is not necessarily a negative factor for future growth. It can potentiate human capital and yield a fair return on the investment if properly managed. Thus, the impact of public debt in the long-term should be carefully examined, for example, by comparing expected benefits with obligation to pay back. One of the key questions to be asked is whether we are properly investing in the next generations by the current borrowing, or we are merely responding to the immediate needs with debt and leaving an enormous financial burden to children and adolescents, in comparison to the benefits received through public social services.

In 2016 UNICEF initiated a short-term research project to measure intergenerational inequality of public debt by employing the known methodology of Generational Accounting. Based on the results of this research, it is highly likely that the current levels of borrowing will affect the future generations, causing a large fiscal gap between benefits and burden. Following this quick assessment, this consultancy will review and strengthen the evidence through applying Generational Accounting in a more robust manner.

UNICEF has also established an Advisory Council for children to develop policy dialogues with key actors in social and financial policies in El Salvador, the results obtain in the consultancy will be used as evidence by this council. The consultant will be expected to visit the country and discuss possible adjustments to sustainable fiscal policy with members of the Council, academia, government officials and other stakeholders in El Salvador.

2. Justification

Even with the recent progress in public finance discussions in El Salvador, not much attention has been paid to the intergenerational inequality of public debt in the long-term. In 2016 UNICEF launched a pioneering research project using Generational Accounting and succeeded in obtaining some initial results. However, in order to further strengthen scientific evidence and promote policy discussions about sustainable fiscal policy, it is necessary to receive technical assistance from a senior expert with extensive knowledge and experience in fiscal policy research and advocacy.

 3. Specific objectives

1. To review and analyse the fiscal situation in El Salvador, particularly the intergenerational inequality of public debt using the Generational Accounting methodology.

2. To present the results of the analysis and promote policy discussions with key actors government and civil society actors related in the country related to the social and fiscal policies.

3. To provide recommendations on possible fiscal adjustments to ensure fiscal sustainability for children and adolescents for the future generations. 

4. Methodology

The consultant will work under the orientation and supervision of the Social Policy Specialist, of UNICEF El Salvador.

This is remote consultancy and the consultant will be expected to report progress to the supervisor about once every two weeks via online meetings. Also, two one-week visits to El Salvador are required one at the start and another one at the end of the consultancy.

5. Deliverables

Product 1: Research proposal

Review of existing documents and data related with the intergenerational inequality of public debt in El Salvador, particularly the initial results of an initial analysis based on Generational Account developed by UNICEF, to briefly assess the present fiscal situation at the national level, and to design a more robust analysis applying the Generational Accounting methodology.

The research proposal will be presented to key stakeholders during a visit to El Salvador, within two months after starting the contract.

Product 2: Mid-term report

Draft report with preliminary findings from the analysis based on the Generational Accounting methodology, including initial key policy recommendations. 

Product 3: Final report

A quantitative analysis on intergenerational inequality of public debt, final policy recommendations on fiscal sustainability for children and adolescents, taking into account suggestions and comments given by the Advisory Council and other key individuals.

The final report with policy recommendations to El Salvador will be presented during a visit to the country.

All documents should be drafted with Microsoft Word and submitted by email.

 6. Estimated duration of contract

7 months (July 2017 – January 2018) after signing the contract.

 7. Conditions of work

1. UNICEF will provide all information necessary for the analysis, including existing studies and statistical data. If specific information is needed for fulfilling the duties of this consultancy, the consultant should report to the Social Policy Specialist.

   In order to develop the consultancy it is required for international consultants to have two trips to El Salvador, all travel expenses including flights, transportation from the airport to hotel and hotel expenses should be included in the consultancy budget.

   UNICEF will support with local transportation to attend meetings.

   This is a consultancy service contract and the selected candidate will not hold an international civil servant status, nor is he/she a “staff member” as defined in the United Nations Staff Rules and Regulations. Since this contract does not provide health insurance and any other fringe benefit, the successful candidate will be asked to submit a valid medical insurance certificate before signing the contract.

   8. Qualifications

1. Postgraduate degree (Ph.D. desirable) in economics, public policy, finance, or other relevant social science field is required.
2. At least 20 years of professional experience in macroeconomic and financial research and public policy consultancy at the international level. Experience in emerging countries, is an advantage.
3. Extensive experience in using the Generational Accounting methodology is required.
4. Strong analysis skills of quantitative data and the use of Microsoft Excel and other statistical software.
5. At least 10 years of experience in promoting policy dialogues with diverse groups of stakeholders, including the fiscal authorities, is desirable.
6. Fluency in English. Working knowledge of Spanish is an asset, but it is not required.
7. Knowledge of UNICEF’s priorities and initiatives to promote the rights of children in this field.
8. Previous experience in working with WB, IMF, OECD, UNICEF or other UN agencies.

 9. Estimated Budget

The total amount will be stablished from the financial proposals received as part of the solicitation process, which will be paid in three instalments in accordance with the submission of the deliverables mentioned below.

• Product 1: 30% of the total amount of contract
• Product 2: 30% of the total amount of contract

• Product 3: 40% of the total amount of contract

   This consultancy will be financed with Regular Resources (RR) charged at WBS 1380/A0/05/604/003 (4.3).

10. Confidentiality of information

1. All information obtained through work assignments of this consultancy, including both qualitative and quantitate data, and output documents are property of UNICEF and cannot be used for any other purpose unless authorised.

 11. Requirements to participate:

. Consultants interested in participating must submit the following documentation:

. Technical proposal that also includes: updated Curriculum Vitae and P-11 form (Attached), duly filled and signed.

. Financial Proposal 

Deadline for receipt of proposals: Friday, July 21st, 2017 at  1:00pm (El Salvador’s time)

The proposals will be received by email addressed to: lsaldana@unicef.org,

lsaldana@unicef.org, indicating in the title of the mail the name of this consultancy.

Written inquiries will be received before the closing date, addressed to: samaya@unicef.org, which will be answered as soon as possible by email, with a copy to all participants.

12. Criterio de evaluación. 

The offers received will be evaluated in two aspects: technical and economic proposal, with a division of 70/30, respectively. 

The technical proposal should include: proposal of work, schedule of activities, presentation of the consultant, including CV and P-11 format (Attached) duly filled, signed and sealed, and evidence of compliance with the requested profile.

The financial proposal must indicate competitive prices without VAT.

Please indicate your ability, availability and daily/monthly rate (in US$) to undertake the terms of reference above (including travel and daily subsistence allowance, if applicable).  Applications submitted without a daily/monthly rate will not be considered.

UNICEF is committed to diversity and inclusion within its workforce, and encourages qualified female and male candidates from all national, religious and ethnic backgrounds, including persons living with disabilities, to apply to become a part of our organisation.