SL's SSN programs suffer from poor targeting - IMF

Sri Lanka's Social Safety Net programs suffer from poor targeting - IMF

by Zulfick Farzan 21-03-2023 | 12:54 PM

COLOMBO (News 1st); The International Monetary Fund on Tuesday (21) said that the Extended Fund Facility (EFF) arrangement for Sri Lanka sets a minimum spending floor by the government on the social safety net program.

The International Monetary Fund (IMF) Executive Board on Monday (20) approved SDR 2.286 billion (about US dollars 3 billion) under the Extended Fund Facility (EFF) to support Sri Lanka’s economic policies and reforms.

The IMF report on the EFF noted that Social Safety Net (SSN) programs in Sri Lanka are fragmented, with several implementation agencies, which has led to a lack of ownership and widespread inefficiencies in delivery of SSN programs.

Masahiro Nozaki, the IMF Mission Chief for Sri Lanka said the EFF program said that Sri Lankan authorities have committed to SSN spending of Rs. 187 billion (0.6 percent of GDP) in 2023.

Sri Lanka’s SSN programs monitored under the EFF-supported program comprise the Samurdhi program (largest poverty-targeted cash transfer program in Sri Lanka), as well as assistance to the elderly (over 70 years), allowance for disabled people, and financial support for kidney patients.

Masahiro Nozaki highlighted that Sri Lanka's Social Safety Net program suffer from poor targeting.

"Right now the social safety nets cover about 40% of poorer households, that should be significantly increased and some social safety net spending is going towards relatively rich families. Around 10% is spent on the rich segment of Sri Lankan society. So that should be corrected," he told reporters.

The IMF Mission Chief said that reforms for Social Safety Nets will be done throughout 2023.

He also noted "The IMF disbursement is not tied to specific spending, that is the difference with other programs or project loans from other international creditors or lenders. In the case of IMF, this amount is used by the government and it doesnt attach to specific spending."

He also said that the Sri Lankan government commits to introduce anti-corruption legislation in line with UN convention against corruption and that includes both asset declaration and asset recovery. 

"The asset deceleration part is going to be addressed in the near term, with the anti-corruption law. The asset recovery part takes a little bit more time, and it will be addressed by March 2024," he said.

The IMF report also noted that authorities are also undertaking far-reaching institutional reforms to improve efficiency, coverage, and targeting of SSN programs.

These reforms include the following:

- Operationalizing the Welfare Benefit Board (WBB).

- Developing a new Social Registry (SR) and eligibility criteria.

- Introducing a new Welfare Benefit Payment Scheme.