Finance must not hold us back from achieving our education goals

Countries worldwide are grappling with a significant learning crisis as millions of children lag in fundamental literacy and numeracy skills. Moreover, the evolving demands of employers require that young people be equipped with adequate skills to compete in the modern workforce.

Yet, limited budgets and rising debt hinder government investment in education. Public investment and Official Development Assistance (ODA) in education are losing momentum. During the last decade, total education spending by governments, households, and donors globally has increased, but this has not led to significant increases in allocations per child, especially in poorer countries with growing populations. Further, the escalating global debt is likely to limit countries' ability to augment their investments in education. The situation has become particularly worrisome for low-income countries (LICs) and low- and middle-income countries (LMICs), some of which are allocating nearly the same per capita resources to debt servicing as they do to education.

In LICs and LMICs financial resources for education are limited and often used inefficiently:

Investing in education is essential for economic growth

Financing education directly contributes to economic growth and social development, yielding substantial returns on investment. Research shows that for every additional year of schooling, individuals can expect significantly higher incomes, enhancing their quality of life and boosting national productivity. By prioritizing education financing, governments can foster a higher-skilled workforce, reduce inequality, and stimulate sustainable development, ultimately benefiting society as a whole.

To achieve this promise, education financing must be:

• Adequate to ensure that education systems have the necessary resources to meet the sector's needs.
• Efficient to guarantee that these funds are utilized effectively to maximize learning outcomes.
• Equitable to provide all individuals, regardless of their background or circumstances, with equal access to quality education.

Resources on Education Finance

A key priority of the World Bank's work on education finance is assisting countries to make better use of their investments in education. Through project financing, analytical, and advisory work, we help countries align their available resources with national development and education goals, shed light on the sources of inefficiency, and strengthen their public financial management systems to plan, budget, and use resources more efficiently.

Education Finance Watch (EFW)

The Education Finance Watch is a collaborative effort between the World Bank, the Global Education Monitoring (GEM) Report, and the UNESCO Institute for Statistics (UIS). The report summarizes available information on patterns and trends in education financing around the world.

Global Report on Education Finance

The World Bank's forthcoming Global Report on Education Finance, expected in FY26, aims to contribute to in-depth insights on education finance globally, introduce viable - and innovative - additions to traditional public financing, and shape the global dialogue on sustainable education funding across all levels. The report will seek to answer three main overarching questions:

1. Where should countries invest their marginal dollar available for education?
2. How can we make education financing more adequate, efficient, and equitable?
3. What is the role of education financing in the ongoing green and digital transitions?

Public Expenditure Reviews

Public expenditure reviews are one of the World Bank's core diagnostic tools for informing various stakeholders about the state of education financing in a country. Such reviews assess the efficiency, effectiveness, and equity of expenditures on education and their adequacy and sustainability relative to the country's educational goals. Guidelines for public expenditure reviews in education set content and quality standards, using technical notes and examples to help users meet these standards.

Public Financial Management

The FinEd Tool is designed to assist country teams in identifying key challenges and reform opportunities associated with financial management in the education sector in client countries. The Tool uses a problem-driven approach to identify and analyze public financial management (PFM) bottlenecks that undermine service delivery and education outcomes, from both a bottom-up and top-down perspective. The methodology seeks to establish the links between school financing arrangements, PFM systems and practices, and service delivery outcomes.

Global Engagement

• The World Bank closely collaborates with the UNESCO Global Education Monitoring Report (GEM) and the UNESCO Institute of Statistics (UIS) for the Education Finance Watch (EFW).The GEM Report, established in 2002 and hosted by UNESCO, is a crucial resource for tracking progress toward the sustainable development goal 4 (SDG4) on ensuring inclusive, equitable quality education and promote lifelong learning opportunities for all.
• SDG4 High-Level Steering Committee (HLSC): The World Bank plays an active role in the HLSC, a global body managed by UNESCO that provides strategic guidance, reviews progress, and makes recommendations on actions for countries to achieve SDG4. One of the functional areas (FAs) of the HLSC pertains to education financing (FA3). The FA3 technical teams have recently drafted a 'Global Narrative' document that underscores the critical role of education in driving global economic growth and development.
• The Global Education Forum (GEF): The GEF was established as a core part of the Global Education Cooperation Mechanism. It brings together high-level leaders from key donor countries and multilateral institutions supporting the acceleration towards SDG4. Contributing to and supporting the work of the SDG4 High-Level Steering Committee (HLSC), the GEF aims to strengthen international support and advocacy for increased and more effective investment in global education. The World Bank is endorsing the GEF's initiative to form a Coalition of Finance Ministers for Education, aimed at creating a global roadmap to enhance advocacy for increased and improved investments in education.
• Education Above All (EAA): The World Bank, Qatar, and Education Above All have partnered to address the global education crisis by expanding access to quality education. Through innovative financial tools, such as education investment swaps, the partnership aims to reduce debt in low- and middle-income countries while driving education outcomes. Together, they will co-finance programs that tackle learning poverty and create new opportunities for youth, with a focus on the Middle East and North Africa.

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