Strengthen social safety net before phasing out subsidies

Due to the recent rise in energy prices in the global market, it is not possible for the government to provide these services at lower prices. In addition to oil and gas, electricity prices have also been hiked to meet the subsidy pressure. And there is very little scope to reduce the subsidy in the agriculture sector, mainly fertiliser and irrigation, considering the issue of food security.

Although subsidies are given by the government to benefit the poor, these benefits are not always received by them. A large portion of government subsidies goes to the well-off. In such case, the amount of subsidy should be gradually reduced to zero. Because to deal with the subsidy pressure, the government is not able to provide adequate funding for human resource development such as education, health and social safety sectors.

The subsidy is supposed to be reduced gradually and the IMF has asked the government to make a formula for fuel price adjustment. But the prices of oil, gas and electricity are being hiked at massive rates without making the pricing formula.

The people below the poverty line do not have the ability to cope with the pressure of increasing gas, electricity and fuel oil prices. Many have to spend days without food due to increased expenses. People above the poverty line are going below the line due to the abnormal increase in the prices of daily commodities. The government should increase assistance to these people.

The government pledged to reduce subsidies and increase the size of social security to get IMF loans, which is very logical. But, despite the hasty reduction in subsidies, social safety allowance has not been increased in recent times. Such a beautiful pledge should not be confined to paper. If not implemented, the loan may be available, but it will be of no use to the people. A radical reform in the social safety system should be undertaken.

Every year, the budget shows a hefty allocation to the social safety net programmes, but a large part of it goes to the pension of retired government employees and to the interest of various incentive loans, including savings certificates. Only a small portion is earmarked for the poor.

First, the real size of the social safety net, excluding the nonpoor, has to be identified. If the size of the actual social safety allocation increases, then the per-recipient allocation will not be limited to Tk500-700, which is worthless to meet the needs of one person.

With per-recipient allocation, the safety net should also be widened as a large number of poor and elderly people still remain excluded from it.

Transparency should be brought into the selection process of social safety beneficiaries. The chairman and members of the union councils nominate their own people for various allowances and oftentimes they give allowance cards in exchange for money. As a result, the actual poor are deprived.

The biggest obstacle to social safety is the lack of a database of poor people. With the help of the World Bank, the Bureau of Statistics has not been able to create a database in the last decade.

It is not that the officials concerned in the government are completely unaware of these problems. In 2015, the Cabinet Division approved the "National Social Security Strategy (NSSS) of Bangladesh" which detailed all these problems with solutions. There were plans to cut the number of social safety programmes from 145 to a dozen but no initiative has been taken in this regard even in all these years. If this NSSS could have been implemented, the country could have moved to a much higher position in terms of social safety.

Lack of political will and weak commitment are the main reasons for this. Local government representatives and local administration officials have been embezzling social safety allocations in various ways, and no one has been brought to justice.

Dr Mustafa K Mujeri, former Director General of BIDS, shared his take on the IMF reform conditions as he spoke with TBS Senior Reporter Jahidul Islam.