WB okays $500m for safety net schemes

The World Bank board yesterday approved $500 million to strengthen major safety net programmes of Bangladesh.
The credit will improve equity, efficiency and transparency of the safety net schemes, the WB said in a statement.
The bank's credit is a result-based financing modality, where 86 percent of the funds would reimburse expenditures made under safety net programmes against specific performance indicators, according to the statement.
The credit aims at allocating increased resources to the poorest, particularly poor women, and introducing an objective targeting system to better identify the poor.
Further, the project will focus on expanding the provision of cash-based transfers through the banking system.
The WB credit will support five safety net programmes -- Employment Generation Programme for the Poorest, Food for Works, Test Relief, Gratuitous Relief, and Vulnerable Group Feeding -- implemented by the disaster management and relief ministry.
The credit programme will also support the Statistics and Informatics Division for the development of a database of poor households that would facilitate better targeting for safety net service delivery.
The programme would contribute to improving coordination among various safety nets implemented by different ministries.
“Bangladesh has made remarkable progress in poverty reduction over the last 10 years, achieving a 26 percent decline in the number of poor people,” said Johannes Zutt, WB country director for Bangladesh.
Better use of social safety nets will help Bangladesh continue this progress, and achieve further significant poverty reduction, he said.
“Efficient and transparent implementation of five of the largest safety net programmes would not only help increase a much needed coverage of the poor in the short term, it would also help the government of Bangladesh improve the quality of a large amount of public expenditure earmarked for social protection in the medium term,” said Iffath Sharif, task team leader of the Safety Net Systems for the Poorest project of the WB.
Despite Bangladesh's remarkable progress in lifting 16 million people out of poverty in the past decade, poverty remains a stubborn problem, with about 47 million people living in poverty and 26 million in extreme poverty, according to the statement.
The WB said the government implements a number of public social safety net programmes that involve spending of more than 2 percent of GDP (gross domestic product) a year to support the poor and vulnerable.
Despite these interventions, 70 percent of poor people still do not receive any safety net support, mainly due to shortcomings in identifying poor beneficiaries and programme administration, said the global lender.
The interest rate of the WB credit is 0.75 percent and repayment will have to be made in 40 years with a 10-year grace period.