Improving Efficiency and Mobilising Resources for Poverty Reduction Initiatives in Sri Lanka

Abstract

Sri Lanka's performance in poverty reduction over the years has been commendable, with the poverty headcount ratio falling to 6.7% in 2012/13 and successfully achieving the MDG of halving poverty before the deadline. The reduction in poverty should ideally lead to a decrease in expenditure on the poor. However, this has not been the case for Sri Lanka. Government expenditure related to poverty and vulnerability has shown a remarkable increase in recent years. A closer inspection of the existing government poverty and vulnerability initiatives shows that there are many inherent inefficiencies leading to the ineffective implementation of programmes. This policy insight focuses on possible improvement in cost-efficiency of current poverty reduction programmes -- primarily, the Divineguma programme as it is the single largest -- while lessening their fiscal burden and explores the potential of mobilizing private sector participation as a complementary measure of financing poverty reduction.