Despite considerable progress in reducing poverty over the past 15 years, half of Bangladesh's population is still poor. With a combination of sound macro-economic policies, institutional reforms, and good governance, Bangladesh can achieve the MDG goal of halving the 1990 poverty rate by 2015. However, the extent of poverty and vulnerability would still be significant and, in absolute terms, the numbers would remain high. Recognizing this challenge, the Government has emphasized social protection as a pillar of the PRSP, and well-functioning safety nets as an important element of the social protection strategy to cope with poverty.
Today Bangladesh spends less than 0.4% of GDP on safety nets - about half of the 1% of GDP spent in the late 1990s. The country has a patchwork of safety net programs (e.g., cash and in kind transfers, micro-credit schemes, and conditional cash transfers) for widows, the disabled, blind, orphans, the aged, to name just a few – each with its own large administrative overheads. But do they meet the needs? Coverage of these safety nets is very low and reaches a very small part of the target needy population. At the same time, despite the low coverage, multiple programs often serve the same beneficiary, and benefits go to those who do not need them.
This paper assesses the current system of social safety nets in Bangladesh. It focuses attention on the poor, recommends revisions to existing programs and institutional arrangements, proposes new strategies to minimize poverty and vulnerability, and proposes how to improve the allocation of limited fiscal resources and the efficiency with which these resources are used.