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World Bank Supports Social Protection Programs for the Poor in the Maldives

June 2, 2011

WASHINGTON, June 2, 2011 – The World Bank today approved US$12 million in additional financing and restructuring of the Maldives Pension and Social Protection Administration (PSPA) Project to improve delivery of social protection benefits to the poor and strengthen the national pension plan.

The original PSPA project, launched in 2009, saw the implementation of the country’s first pension law and the creation of an entire pension program, from governance to record-keeping. The impressive progress achieved by the original program has spurred the Bank to extend the additional financing, which effectively expands the scope of the project. The additional financing is also in recognition of important new Government initiatives to reform the country’s health insurance program and put in place appropriate mechanisms for determining eligibility for various social protection programs.

A recent World Bank assessment of social protection programs in the country suggested that benefits from most programs do not fully reach the poor and that there are large inclusion and exclusion errors,” said Diarietou Gaye, World Bank Country Director for Sri Lanka and the Maldives.

A key component of the restructured PSPA, thus, includes new activities which are critical to strengthening the overall capacity and institutions which provide social protection programs. These include the development of a system to focus limited resources on the poor, assistance in disability coding and benefit administration and development of systems to deliver health insurance to all recipients of the basic pension as well as social assistance beneficiaries.

The Bank support for the health insurance component is aimed at facilitating claims processing, transaction monitoring, fraud control and general information systems along with capacity building at the Maldives Ministry of Health and Family.

An important development during the last two years is the Government’s initiative to develop a targeting system that could be used by various government-sponsored programs, such as cash transfers to the poor, to rationalize the social assistance and focus limited resources where it really matters,” said Robert Palacios, Project Team Leader.

This component also complements the Government’s overall medium-term fiscal consolidation efforts being implemented since 2009 to reduce an unsustainable fiscal deficit of 31% of GDP that year.

The pension component of the Bank support includes strengthening the implementation of the National Pension Act (NPA) and improving institutional capacity of key agencies responsible for implementing the NPA, particularly the Capital Market Development Authority (CMDA) in its role as pension supervisor.

The World Bank assistance, to be disbursed over a four-year period starting in August 2011, is a grant from the International Development Association (IDA), the Bank’s concessionary lending arm.

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