Sri Lanka signs $ 75 m social safety net project with World Bank

World Bank Country Director for Sri Lanka and the Maldives Idah Pswarayi-Riddihough and Secretary to the Treasury, Ministry of Finance Dr. R.H.S. Samaratunga yesterday sign the loan agreement 

Sri Lanka has signed a $ 75 million World Bank credit to support the country’s welfare programs, the multilateral donor announced yesterday.  

The project includes an integrated system to better manage the selection, administration, and payments to beneficiaries. It will help improve the equity, efficiency and transparency of the social safety net system.

The project will allow the Government to develop a single registry of citizens with information on family structure and economic characteristics. The Welfare Benefits Board, set up to manage the selection and payment of beneficiaries, will develop new selection criteria based on data in the registry. This will make identification fairer and more transparent, and ensure that benefits reach intended households. The project will also strengthen the Government’s capacity to monitor and improve welfare programs. 

World Bank Country Director for Sri Lanka and the Maldives Idah Pswarayi-Riddihough, and Ministry of Finance Secretary to the Treasury R. H. S. Samarathunga signed the project on behalf of the World Bank and the Government. She said, “Safety net programs are a safety valve for Sri Lanka’s poor and vulnerable populations. By increasing the efficiency of expenditures, the project will make social spending more sustainable, while ensuring that targeted households receive the full benefit of the programs. Over time, it will also help the Government refine programs to address emerging fiscal challenges, such as an aging population.” 

The project will be implemented by the Ministry of Finance 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.

Today, Sri Lanka has more than 30 welfare programs operated by 11 different ministries. A lack of digital record-keeping limits their capacity to coordinate, monitor and evaluate, and prevent fraud and mismanagement. While program costs have risen gradually over time, coverage of the poorest households has fallen. Analysis by the World Bank shows that the programs have had a decreasing impact on poverty over the past decade. This poses a challenge when the population is aging, a shift that is likely to increase demand for social assistance in coming years.

Data in the registry will be updated periodically, with records reviewed to ensure that only eligible beneficiaries remain in the programs. To prevent fraudulent applications, each individual will be identified using biometric technology.

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

“Governments around the world increasingly focus on system approaches to social protection,” said Senior Economist and World Bank Task Team Leader for the project Thomas Walker, “Harmonising the delivery of 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 - through the IDA Scale Up Facility. It has a final maturity of 24 years, including a grace period of five years.