World Bank approves $ 75 m to strengthen social safety net program

The World Bank Board has approved a $75 million credit from the International Development Association (IDA) to support Sri Lanka’s main welfare programs by developing an integrated system to better manage the selection, administration, and payments to beneficiaries of the programs. The project will contribute to improving the equity, efficiency and transparency of the social safety net.

The Social Safety Nets Project, to be implemented by the Ministry of Finance, will assist the government to develop a single registry of citizens containing information on family structure and economic characteristics. 

The Welfare Benefits Board, set up to manage the selection and payment of welfare beneficiaries, will develop and apply new selection criteria based on data in the registry. This will make the identification process fairer and more transparent, and ensure that the benefits reach the intended households. The project will also strengthen the government’s capacity to monitor and improve welfare programs.

The project will be implemented in partnership with the Ministry of National Policies and Economic Affairs, the Ministry of Social Empowerment and Welfare, and the Information and Communication Technology Agency (ICTA).

Today, there are more than 30 welfare programs in Sri Lanka, operated by 11 different ministries. A lack of digital record keeping limits the capacity of the Government to coordinate amongst themselves, monitor and evaluate, and prevent fraud and mismanagement in these programs. Although program costs have risen gradually over time, the share of the poorest households covered has fallen. 

Recent analysis conducted by the World Bank shows that Sri Lanka’s welfare programs have had a decreasing impact on poverty over the past decade. This poses a challenge at a time when the population is aging, which is likely to lead to increasing demands for social assistance in coming years.

“Safety net programs act as a safety valve for Sri Lanka’s poor and vulnerable populations,” said Idah Pswarayi-Riddihough, World Bank Country Director for Sri Lanka and the Maldives. “By increasing the efficiency of safety net expenditures, the project will improve the sustainability of social spending while ensuring that targeted households receive the full benefit of such programs. Over time, it will also enable the government to review and refine programs to better address emerging fiscal challenges such as the burden of an ageing population.”

As part of the project, data in the registry will be updated periodically, and records will be reviewed to ensure that only eligible beneficiaries remain in the programs. To prevent fraudulent applications, each individual will be identified in the registry using biometric technology.

A ‘one-stop shop’ platform will also be developed to harmonise the management of different welfare programs at the divisional secretariat level. This will help improve the customer service experience and reduce application processing times for welfare beneficiaries. Through these initiatives, the project will help to modernise Sri Lanka’s welfare system for the future needs of Sri Lanka’s citizens.

“Governments around the world are increasingly focusing on system approaches to social protection,” said Thomas Walker, Senior Economist and the World Bank’s Task Team Leader for the project. “Harmonising the delivery of different social protection programs has the potential to enhance each program’s performance and increase the overall benefit of social spending for those most in need.”

The credit is from the International Development Association (IDA) – the World Bank’s concessionary lending arm – the credit is from the IDA Scale Up Facility, which has a final maturity of 24 years including a grace period of five years.