Social Protection Project

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Sri Lanka has fallen into an economic crisis, caused by an inability to finance its external obligations. This crisis hasmanifested in liquidity constraints and rising prices of fuel and food, and has precipitated a political crisis and social unrest.The combined economic and political crisis has severely reduced living standards in Sri Lanka, and the situation may worsen incoming months. This project will contribute to the World Bank's emergency response package, providing critical support tohouseholds during the crisis through provision of targeted cash transfers. The project will also support work to address structuraldeficiencies in Sri Lanka's social protection system, to ready it to deliver assistance in response to this and future crises.Theproject will provide critical support to households during the crisis through provision of targeted cash transfers. These transferswill commence in August 2022, following on immediately from the cash transfer support provided with funds repurposed from existingprojects under the Contingent Emergency Response Component (CERC) procedure. The support will be in three parts: (i) an expansionof the EB, DB and CKDU categorical cash transfer programs to include all eligible applicants not currently covered by the programs;(ii) a top-up to the EB program to LKR 5,000, to ensure benefit adequacy; and (iii) a new emergency cash transfer (ECT) programtargeted to the poorest 10 percent of Sri Lankan households. The categorical program eligibility criteria are already well-definedand will be used unchanged. The criteria for selection into the ECT program will be based on the multi-deprivation score (MDS)formula developed by the Department of Census and Statistics for the WBB.6 This project will build a fresh social registry toensure benefits are provided to households whose identity and eligibility are transparently validated. While the temporary cashtransfers financed by the CERC will use existing program delivery systems and beneficiary lists, these lists are based on data nowmany years old and have not been updated to account for changes in household economic circumstances through the pandemicand current crisis. To ensure all eligible households are included, a new call for applications to the EB, DB and CKDU allowanceprograms will be issued. Existing beneficiary lists and waiting lists for these programs will be checked against the electoralregister and ID database to ensure all beneficiaries are eligible for the programs and to eliminate any fraudulent applications ordouble-dipping. Data on EB applicants will also be cross-checked against Pensions Office records to screen out any applicantsalready receiving public sector pensions. The newly validated beneficiary and applicant lists will be uploaded into the existingregistry (SRIS) at the WBB established under the Social Safety Nets Project, in order to be available for the management andtargeting of other social welfare programs and disaster relief efforts in the future. This will serve as a major step forward inbuilding a modern social protection system for Sri Lanka. The collection, storage and use of all personal data would adhere to theBank requirements on data protection as well as the national legislation on personal data privacy. Payment of benefits will bemade by direct electronic transfer into beneficiaries’ personal bank accounts, to ensure thorough accountability and ease ofaccess. Bank details will be collected during the application phase, and applicants without bank accounts will be required to haveone opened. Payment of some benefits (such as DB) is already done by bank transfer, while in the case of the EB program, benefitsare currently paid through the post office. For the funds transferred under this project, bank transfers will be used universallyto ensure an adequate audit trail. There will be exceptions allowed in special cases where beneficiaries cannot access banks, suchas among some people with disabilities. Following registration, applicants to the ECT program will be visited by government staffto collect additional data on their socio-economic situation needed to determine eligibility. The software to collect the data hasbeen developed under the Social Safety Nets Project. The data collection process will employ eight officials in each of thecountry’s 332 DS divisions, who will be assigned tablets with the software installed. Following a short training program, theofficers will visit each registered household and collect the data. The government expects to assess around 2.5 million households,which is expected to take 3-4 months. The captured data will be held securely in the device and uploaded using a secure protocol tothe cloud-based SRIS. Once the data are collected, the MDS formula will be applied to select the poorest households for support.The ECT program is expected to commence immediately the assessment phase is complete, likely in November 2022. The cash transferssupported by this project – including the expansion of the categorical programs, the top-up to the Elderly Benefit, and the ECTprogram – will be implemented by the WBB, under the Ministry of Finance. The WBB will carry out all the processes related toregistration, data collection and selection of beneficiaries, including: (i) coordinating the registration, validation andassessment of applicants; (ii) managing the and ensure its integrity (later to be handed over to WBB); iv) verify the disbursementreports and any reconciliations reports and direct corrective action; v) manage the deployment of the equipment and resolve anytechnical issues; vi) train DS officers and manage a Help Desk (both Sinhala and Tamil); vii) design and implement a communicationand outreach program; viii) coordinate the various government departments for the smooth functioning of the overallprogram.Component 1: Coverage expansion and top-up for the existing categorical cash transfer programs ($95 million). Thiscomponent will finance the expansion of the EB, DB and CKDU programs for a period of 12 months. Benefits will be paid directly intobeneficiary bank accounts, and only to beneficiaries registered and verified by the WBB as being eligible according to the existingprogram selection criteria. This component will finance: (i) Monthly benefit payments to qualified new applicants for the EB, DBand CKDU allowance who are validated by the WBB, for a period of 12 months; and (ii) a monthly top-up of LKR 3,000 to all EBprogram beneficiaries (both existing and new) who are registered and validated by the WBB, for a period of 12 months. Component2: Emergency Cash Transfer program ($200 million). This component will finance a new, temporary monthly cash transfer to thepoorest 20 percent (approximately 1.2 million households), for a period of 12 months. Registration and selection for the programwill be coordinated by the WBB, financing for which is provided under Component 3. The beneficiary in each household will be thefemale household head, where possible. All existing welfare program beneficiaries and applicants will be considered for coverage bythe program, along with any other households wishing to apply. The poorest 20 percent of households will be selected for benefitsusing transparent means test criteria developed and gazetted by the WBB and based on updated data collected by the WBB with supportfrom this project. Registration is expected to begin in July 2022 and take 3-4 months, with the transfers commencing in November2022. Component 3: Social Protection Systems Strengthening ($5 million). This component will finance overall project managementand capacity building for the WBB, technical assistance to develop and implement the social protection reform program, andincremental operating costs. Specific activities under this component will include the following: Operationalization of theWelfare Benefits Board.  The WBB was established in 2016 but has been inactive since 2019.  This activity will