An identification mechanism shared by ten institutions

www.icbf.gov.cocarguesavancedocsconpes_dnp_0117_2008 .htm. —. 2009. Documentos Metodológicos. Bogotá. Available at: www.sisben.gov.coInformaciónDocumentosMetodológicos. —. 2015. SISBEN website. Available at: www.sisben.gov.co. Departamento Nacional de Planeación, Subdirección de Promoción Social y Calidad de Vida. 2011. Guía para uso del Sisbén III – Versión 2 Bogotá. Departamento Nacional de Planeación; Ministerio de Salud; UNDP; Misión Social. 2001. Evaluación integral del SISBEN Bogotá. Departamento Nacional de Planeación; UNDP; Misión Social. 2003. Quién se beneficia del Sisbén? Evaluación Integral Bogotá. Available at: www.pnud.org.cositio.shtml?apc=a-c0200114--x=18711. F es eda, O. . El siste a de sele ió de e efi ia ios el gi e su sidiado de salud e Colo ia , i Jou al of Comercio Exterior, Vol. 53, No. 6, pp. 574-586. ILO. 2014. Colombia: Universalizing health protection Geneva. Available at: www.social- protection.orggimigessRessourcePDF.action?ressource.ressou rceId=48019. Lasso, F. 2006. Incidencia del gasto público social sobre la distribución del ingreso y la reducción de la pobreza Bogotá, DNP, Misión para el diseño de una estrategia para la reducción de la pobreza y la desigualdad MERPD. Schmitt- Dia at , V. . Colo ia issio epo t Ge e a, ILO, Social Security Department. Available at: www.social- protection.orggimigessShowRessource.action?ressource.ress ourceId=18538. Velez, CE; Castaño, E; Deutsch, R. 1998. An economic i te p etatio of Colo ia s “I“BEN: A o posite elfa e i de derived from the optimal scaling algorithm Washington, DC, Inter-American Development Bank IDB. 9 . Ecuador: Financing social protection through debt restructuring 15 Ecuador offers an excellent recent example of how restructuring sovereign debt can be used to create fiscal space for social development expenditures. The idea of swapping debt for development has been around since the 1980s as a way out from the Latin American debt crisis. During the 1998-2008 decade, 18 debt swaps in 14 countries converted about US608.8 million in debt into support for local development. The Highly Indebted Poor Countries HIPC Initiative, launched in 1996 by the International Monetary Fund IMF and the World Bank, helped eligible countries reduce their debt service payments by about 1.8 per cent of gross domestic product GDP between 2001 and 2014. Linking debt relief to poverty reduction and social policies allowed these countries to increase their expenditures on health, education and other social services. On average, such spending is now about five times the amount of debt service payments. However, only low-income countries could access HIPC. Other countries had to resort to debt restructuring. In recent years, more than 60 countries have successfully renegotiated and restructured debt, and directed debt servicing savings to 15 This chapter was authored by Anis Chowdhury and reviewed by Isabel Ortiz, Jeronim Capaldo, Hiroshi Yamabana and Stefan Urban of the ILO. It was first published in August 2016. development, including social programmes. It is now well accepted that countries can create fiscal space to increase social spending through debt restructuring linked to social programmes.

1. Main lessons learned

 E uado defaulted o its illegiti ate de t a d f eed up public resources for expanding health care, education and social protection programmes. Social spending more than doubled from 4.8 per cent in 2006 to 10.3 per cent of GDP in 2011.  The newly released public resources were also successfully used to help the economy recover from the 2008 financial crisis. GDP growth increased from 0.4 per cent in 2009 to 7.8 per cent in 2011, surpassing the pre- crisis growth rate of 7.2 per cent in 2008.  Debt restructuring enabled the Government, through social and human development investments, to reduce poverty rates from 37.6 per cent in 2006 to 22.5 per cent in 2014, while the Gini coefficient measuring inequality declined from 0.54 to 0.47 during 2006-11.  Co t a to iti s e pe tatio s, E uado `s edit reputation did not suffer as its social investments are regarded as a developmental success. Ecuador was able to sell 2 billion worth of bonds in 2014 when it returned to the international capital markets.

2. E uador’s default o odious de t e pa ds fis al space

In 2008, Ecuador held an official audit to assess the legitimacy of its sovereign foreign debt. The government-commissioned, two- year investigation concluded that some of its foreign debts violated multiple principles of international and domestic law a d e e the efo e dee ed illegiti ate . These e e mostly