Protecting the poor in Sri Lanka:

The role of safety nets during crises and beyond

The Institute of Policy Studies of Sri Lanka (IPS), in collaboration with the World Bank Resident Mission, organised a one-day conference on ‘Protecting The Poor in Sri Lanka: The Role of Safety Nets During Crises And Beyond’ on June 24 at the Ceylon Continental Hotel.

The conference created a forum for discussion of various options available for the Government of Sri Lanka and other development practitioners to support poor households in Sri Lanka to cope with the unfolding impacts of crises.

Executive Director IPS Dr. Saman Kelegama addressing the audience: Seated at the Head Table (L-R), Chairman IPS Buddhadasa Hewavitharana, Acting Deputy Country Director for Sri Lanka and Maldives, World Bank Ludmilla Butenko, Chief Guest at the Conference, Minister of Public Administration and Home Affairs and the Deputy Minister of Finance Dr. Sarath Amunugama and Regional Economic Advisor - South Asia, World Bank Shekhar Shah.

It was essentially an attempt to collate global experiences in using safety nets to fight the impact of crises and to facilitate a discussion on what options make sense for Sri Lanka in its efforts to protect its poor. Resource persons drawn from the public sector, international organisations, and academia and international experts connected via video conference, highlighted strategies and policies to overcome challenges faced by Sri Lanka.

The Chief Guest was Minister of Public Administration and Home Affairs and the Deputy Minister of Finance Dr. Sarath Amunugama.

Executive Director of the IPS Dr. Saman Kelegama in his introductory remarks said that market driven economic growth contributes to poverty reduction in most countries, but markets alone cannot play the role of addressing poverty.

Public policy plays an important role in providing the institutional foundations, within which markets operate, in providing public goods, and in correcting market failures.

In addition to laying the foundation for economic growth, policy can supplement the effects of growth on poverty reduction, and one of the instruments that governments can use to that end is direct redistribution of resources to poor households.

It is in this context that the design and implementation of safety nets become important, he said. He said, the adverse impact of the global financial crisis on living standards in the developing world has given renewed emphasis to the importance of safety nets programs.

He said, “the poorest are particularly vulnerable to shocks however small in magnitude.

An on-going study that explores the impact of natural disasters on the beneficiaries of the Samurdhi safety net program show that debt levels increase, key productive assets are sold, children are taken out of school, and consumption patterns are changed by households, among other things, to mitigate the impacts of shocks.

These adjustments are often difficult to reverse. Current responses that include the right policies have implications well beyond the crisis. Focus should be given to responses that have clear longer-term implications for economic development rather than those that revolve around short-term policies that are ‘populist’ in nature.

Crises often create the political space for governments to either improve existing program or create new ones. If an adequate safety net exists then it should be supported for protecting the poor.

Sri Lanka stands to benefit from drawing on lessons from examples such as the National Rural Employment Guarantee program in India. The Chief Guest at the conference Dr. Sarath Amunugama pointed out that the poverty is a problem of resource allocation. He emphasized that managing an economy/resource allocation is a difficult task and it becomes more difficult at times of crisis.

Regional Economic Advisor, South Asia of the World Bank Shekhar Shah launched two books namely, “The Design and Implementation of Effective Safety Nets: For Protection and Promotion” and “Conditional Cash Transfers: Reducing Present and Future Poverty” in the inaugural session. He discussed safety nets and its lessons which Sri Lanka can adopt.