HOUSEHOLDS GOOD PRACTICE NOTE 5 Assessing the readiness of Social Safety Nets to Mitigate the Impact of Reform Ruslan Yemtsov Amr Moubarak GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM CONTENTS Acknowledgments iii About the Authors iv Acronyms and Abbreviations v 1. Introduction 1 2. Why Focus on SSN Readiness for Energy Subsidy Reform? 3 3. Options for Utilizing Social Safety Nets during Energy Subsidy Reform 8 4. How to Determine SSN Expansion 16 Stage 1: Welfare analysis of losses caused by ESR 16 Stage 2: Stock-taking of existing SSN and near-SSNs, and modeling expansion options 17 Stage 3: Assessing the existing delivery systems for scale-up 20 1. Assessing the Delivery Chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2. Institutions and Governance 3. Assessing Information Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 4. Assessing and Prioritizing Citizen Interface of the Delivery Chain. . . . . . . . . . . . . . 28 5. Conclusion 30 Annex A: Subsidy Reform and Primary Mitigation Measures in Select Countries 31 Annex B: Assessment Tool for Assessing Existing Delivery Systems for Scale-Up 33 1.Assessing the Delivery Chain 33 2. Assessing Institutions and Governance 36 3. Assessing Information Systems 38 4. Assessing and Prioritizing Citizen Interface of the Delivery Chain 40 References 42 Endnotes 45 i BOXES BOXES Box 1: Definition of Social Safety Nets 2 Box 2: Poverty, Electricity Lifelines, and Affordability of Electricity 9 Box 3: Stock-Taking Social Safety Nets in Jordan 20 FIGURES Figure 1: Overview of the Links between Assessing the Readiness of SSN and Other ESRAF Good Practice Notes 2 Figure 2: Possible Approaches for Social Safety Nets during Subsidy Reform 10 Figure 3: Countries’ SSN Options to Respond to Energy Subsidy Reform (by year) 12 Figure 4: How to Scale Up Coverage or Benefit Levels 21 Figure 5: Key Building Blocks of the Delivery Systems Framework for SSN Programs 22 ii GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM ACKNOWLEDGMENTS This is the fifth in the series of 10 good practice notes under the Energy Sector Reform Assessment Framework (ESRAF), an initiative of the Energy Sector Management Assistance Program (ESMAP) of the World Bank. ESRAF proposes a guide to analyzing energy subsidies, the impacts of subsidies and their reforms, and the political context for reform in developing countries. This good practice note was written by Ruslan Yemtsov and Amr Moubarak. The good practice note is based on the Middle East and North Africa (MENA) regional programmatic task, “Preparing MENA Social Safety Nets for Subsidy Reform,” authored by Ruslan Yemtsov, Amr Moubarak, Kathy Lindert, Tina George, Sara Giannozzi, Adea Kryeziu, and Yasuhiko Matsuda. We are grateful for contributions from other authors of the regional work, whose valuable input informed this report, including Sanjay Agarwal, Saki Kumagai, Maria Shkaratan, Paul Mitchel, and Surat Nsour. Qaiser Khan, Thomas Walker, Joern Huenteler, Thomas Flochel, Sheoli Pargal, Catherina Laderchi and other ESRAF task team members contributed valuable comments. Wouter Takkenberg and Jihane Bergaoui provided research assistance. The good practice note was developed under the leadership of Hana Brixi (Practice Manager, Social Protection and Jobs in MENA Region), Margaret Grosh (Senior Advisor, Social Protection and Jobs), Steen Lau Jorgensen (Director, Social Protection and Jobs), and Michael Rutkowski (Senior Director Social Protection and Jobs). Roberta Gatti (Chief Economist, Human Development), Marianne Fay (Chief Economist, Sustainable Development) and Shantayanan Devarajan (Chief Economist, Development Economics Group) provided overall guidance for the work. We are also grateful to the Energy Sector Management Assistance Program (ESMAP) and Rohit Khana (Program Manager) for providing support for the programmatic engagement on Social Safety Nets and Subsidy Reforms in MENA. iii ABOUT THE AUTHORS ABOUT THE AUTHORS Ruslan Yemtsov is a lead economist in the Social Protection and Jobs Global Practice of the World Bank Group. He is coordinating the work of the Global Solutions Group in the area of Social Safety Nets. Prior to his current position, he worked as a lead poverty economist in the Middle East and North Africa region, and in the Eastern Europe and Central Asia regions. His experience includes leading and co-authoring publication on social safety nets and targeting, including major flagship reports on the state of social safety nets in the world, political economy of social safety nets supporting subsidy reform, spatial disparities in development, poverty, and labor market in transition. His country work entailed conducting poverty assessments (Egypt, Georgia, Serbia, Croatia, Macedonia, Bosnia, Russia, Turkey and others), working on targeting (Morocco, Russia, Croatia), managing fuel subsidy reform dialogue (Georgia, Egypt, Morocco, Tunisia, Jordan). He has also worked on country projects focused on food crisis response (Djibouti), structural adjustment credits (Georgia), social funds (Georgia and Egypt), and social welfare delivery systems (Croatia and Russia). He is the author and co-author of more than 25 research papers, articles, book chapters, and monographs. Amr Moubarak is a social protection economist in the Social Protection and Jobs Global Practice of the World Bank Group where he coordinates regional work on readiness of Social Safety Nets (SSNs) for subsidy reform in the MENA Region. He has worked and co-led engagements on SSNs in a number of countries in the region, including Djibouti, Egypt, Jordan, Libya, Saudi Arabia, and Tunisia. His areas of focus include targeting and performance of social safety nets, financially inclusive payment systems, and climate-adaptive social safety nets. Prior to joining the World Bank, he worked at USAID’s Performance Evaluation office in Lebanon and previously at the Center for Global Development where his work focused on household matched-savings schemes and microfinancing pilots. He holds a master’s degree in international development from Georgetown University and a bachelor of science degree in economics.   iv GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM ACRONYMS AND ABBREVIATIONS ALMP Active Labor Market Program BISP Benazir Income Support Programme BLT Bantuan Langsung Tunai (a temporary unconditional cash transfer program also known as Direct Cash Assistance, Indonesia) BLSM Bantuan Langsung Sementara Masyarakat (Temporary Cash Transfer Program, Indonesia) BSM a scholarship program (Indonesia) CGE Computable General Equilibrium (model) DCM Delivery Chain Mapping ECA Europe and Central Asia ESMAP Energy Sector Management Assistance Program ESR energy subsidy reform GCC Gulf Cooperation Council GDP gross domestic product GoJ Government of Jordan Hrv Ukrainian hryvnia HUS Housing Utility Subsidy program I/O input-output ICT Information and communication technology IMF International Monetary Fund ISTD Income Sales and Tax Department IT information technology JD Jordanian dinar kWh kilowatt-hour LEAP Livelihood Empowerment Against Poverty (cash transfer program, Ghana) v ACRONYMS A ND ABBREVIATIONS LPG liquefied petroleum gas MDA ministry/department/agency MENA Middle East and North Africa MNO mobile network operator MoSS Ministry of Social Solidarity NAF National Aid Fund (Jordan) NGO nongovernmental organization NUR National Unified Registry OECD Organisation for Economic Co-operation ₱ Philippine peso PKH a conditional cash transfer program (Indonesia) PMT proxy means test PNAFN Programme National d’Aide aux Familles Nécessiteuses (National Program of Assistance to Needy Families) PSP payment service provider RASKIN Rice for the Poor Program (Indonesia) Rp Indonesia rupiah SPL social protection and labor SSN social safety net SURE Subsidy Reinvestment and Empowerment SWF Social Welfare Fund TSA treasury single account UDB Unified Database US$ U.S. dollar Y Chinese yuan vi 1 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM 1. INTRODUCTION This note provides guidance to policy makers to an oil price shock or currency devaluation. who are looking to utilize Social Safety Nets As such, the analysis presented here can (SSNs) to mitigate the welfare impacts of be used in tackling responses to almost all energy subsidy reforms (ESRs) on the poor other shocks—food price shocks, extreme (see box 1). The good practice note explains weather events, financial crises, droughts (a) why SSNs are an effective tool in the ending in crop failures—that have serious context of ESR, and (b) different options for adverse effects on the poor and vulnerable. rapid scale-up or implementation of SSNs. It introduces a three-stage analytical approach In this context, the note has been prepared for that includes (a) assessing the welfare losses social protection specialists and government caused by ESR; (b) taking stock of existing officials responsible for social sectors portfolio. SSN and near-SSNs, and modeling expansion It provides an overview and guidance on options; and (c) assessing the readiness of the use of tools—principles, methods, and the existing or planned SSNs for providing practices—in the analysis of social protection protection against the negative consequences issues relevant to ESR. The note has a narrow of the price shock. focus, specifically looking at SSNs as measures that can support the poor during times of ESR. The scope of this good practice note is confined to cases where ESRs lead to Countries around the world operate SPL higher prices paid by energy consumers. As programs and policies to help buffer individuals Good Practice Note 1 outlines, ESRs do not from shocks, equip them to improve their necessarily lead to higher prices, and could livelihoods, and create opportunities to build even decrease prices actually paid, such as a better life for themselves and their families. when producer subsidies in the form of price SPL programs cover a wide array of benefits support paid for by consumers are eliminated, and services, usually under the three main or when consumer price subsidies lead to pillars of social safety nets, social insurance illegal diversion and out-smuggling, acute fuel and pensions, and labor market programs shortages, and prices that are even higher than and services.¹ SPL programs evolve in official prices on the black markets. The latter complexity over time—and the mix of is particularly important: consumers may be instruments greatly depends on the country paying much higher prices before the reform, context and “starting point.” Some countries having to develop coping mechanisms to deal operate only a few programs, such as a single with energy shortages. ESRs may improve the cash transfer, a contributory pension for quality of energy delivery service, reducing formal-sector workers, and a handful of energy shortages and thereby improving the services, often with limited coverage. Other welfare of energy consumers. On the whole, countries offer a myriad of SPL benefits and this note does not discuss such potential services. The critical consideration for the benefits of ESRs. Rather, it focuses on cases safety nets as instruments to mitigate negative where ESRs introduce a shock to the economy consequences of price changes on welfare is in the form of higher energy prices, similar their ability to cover all the poor and vulnerable 1. INTRODUCTION 2 and flexibly provide increased volume of In addition to discussing scenario analysis and support when needed. the identification of relevant SPL interventions based on system and country contexts, this note discusses technical elements of expanding BOX 1: DEFINITION OF SOCIAL SSNs in the context of ESR (for example, SAFETY NETS delivery chain processes, institutional and administrative capacity, and governance Social safety nets (SSNs) are measures issues). The note discusses the technical designed to provide regular and predictable support to poor and vulnerable people. A feasibility of mitigating the negative impacts distinctive feature of social safety nets is that of reforms, but does not cover political they are noncontributory, that is, beneficiaries economy considerations or communication do not have to pay or contribute financially strategies to explain reforms (each covered to receive the benefits. That makes them flexible enough to be able to cover all in in a different ESRAF note). This note directs need of support, scale-up, and scale-down. readers to the most relevant resources, SSNs do not account for all the mechanisms including a logical framework to apply the governments may use in responding to most relevant questions at various stages in subsidy reform that aim to mitigate the negative impact on welfare, which may include design and implementation of the mitigation measures in contributory social protection measures during the ESR process. The programs (such as indexation of pensions) framework uses as an input a full-fledged or broader social policy measures (such as analysis of the fiscal burden and incidence of public investment in infrastructure, health, or education). energy subsidies on households, developed in Good Practice Notes 2 and 3. The links with other components of ESRAF framework steps are presented in figure 1. FIGURE 1: Overview of the Links between Assessing the Readiness of SSN and Other ESRAF Good Practice Notes Identifying the value of Initial plan for Module on Political energy subsidies subsidy reform economy of reform Size of shocks for di erent How well the current Reform groups social protection options How the di erent system is able to How to ensure groups will be a ected respond to needs for reforms are by the removal of mitigation of ESR? implementable? subsidies? What else need to be done? Modules on incidence of Module on assessing the Reform proposal and its subsidies on households, readiness of SSNs to mitigate fiscal impact and distributional impact the impact of reform Module on fiscal cost of of reform Module on identifying the subsidies and fiscal impact of impacts on firms and reform. Module on assessing industrial competitiveness public opinion and designing a communications strategy. 3 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM 2. WHY FOCUS ON SSN READINESS FOR ENERGY SUBSIDY REFORM? Social safety nets are noncontributory transfer families (which cash transfers can do—see programs that are targeted to the poor or Bastagli and others 2016). those vulnerable to poverty and shocks. They may alternatively be referred to as Social safety nets (SSNs) play an important social assistance or social welfare programs role in social policy in general, and are in some countries. These programs include pertinent to the situation of coping with income support through participation in public shocks. Most price shocks are unexpected, works programs, cash transfers to poor or meaning that the only way governments can vulnerable households, fee waivers for usage prepare for them is through long-term risk of essential health and education services, management strategies and building a robust in-kind transfers such as school feeding, and SPL system. However, the price shocks caused even targeted subsidies for specific goods by ESR—unlike most other price shocks—are (most often food) deemed essential to poor an example of an “engineered shock” and or vulnerable households. Most countries can therefore be dealt with or prefaced with spend on the order of 1–2% of GDP on the predictable policy actions to help mitigate whole panoply of safety net programs that the negative consequences on vulnerable form part of the social protection system populations. In other words, what makes ESRs (excluding subsidies), individual flagship different is that they can be prepared for. targeted programs cost up to 0.5% of GDP.2 SSNs have many benefits that make them Importantly, targeted energy subsidies, for more effective and efficient at supporting example, in the form of vouchers (giving the poor and vulnerable populations than other right to buy a bottle of liquefied petroleum mechanisms. SSNs can redistribute income gas [LPG] at subsidized price), or lifeline tariffs to the poorest and most vulnerable, with (providing electricity at a reduced price for an immediate impact on both poverty and those consuming less than “social minima”) inequality. They can enable households to are also considered a form of social safety make better investments in their future, nets. However, strong evidence shows that the allowing households to take up investment cost-effectiveness and targeting performance opportunities that they would otherwise miss— of such schemes are inferior to direct cash both in the human capital of their children transfers to the poor (Gentilini 2016; Lakner and in their livelihoods. In addition, SSNs can and Ruggeri Laderchi 2016), and hence they help households manage risk. At a minimum, are often called “quasi” (or near-) SSNs. In safety net programs help households facing addition to often being costly and distortive hard times avoid irreversible losses, allowing (effectively prescribing the quantity of energy them to maintain the household and business products to be used by the poor), they fail assets. Finally, safety nets allow governments to respond to the needs of poor households to make choices that support efficiency and and provide very specific forms of assistance growth. Short-term transfer programs can that fail to address the poverty deficit of poor alleviate the losses of those segments of the 2. WHY FOCUS ON SSN READINESS FOR ENERGY SUBSIDY REFORM? 4 population that will be negatively affected • Reform is likely to generate social tensions by the reforms and prevent those segments and increase the negative perceptions of from opposing and stalling these reforms. An Government policies. Allocating resources adequate permanent social assistance system to progressive, welfare enhancing social can fulfill whatever redistributive goals the safety nets can mitigate against these society has, freeing other sectors from this perceptions of social injustice. role and letting them concentrate on efficient provision of services. The relative importance of protecting the “existing” poor versus the “new” or near-poor Governments often use energy subsidies depends on the size of the shock associated as a tool to lower the cost of living for poor with ESR and the role of energy in the households and shielding households from consumption of the near-poor. Depending price fluctuations. However, energy subsidies on the country, the use and degree of are a very blunt and inefficient instrument. subsidization prior the reform may result in They can be regressive,3 unpredictable on different pathways of effects on the economy state budgets, prone to leakages, and difficult and households. These pathways, as discussed to target.4 They can have distortionary effects in Good Practice Note 3, may be direct and on economic incentives. Therefore, a shift indirect. Direct effects stem from paying in government expenditures from energy higher prices for energy products after the subsidies to direct support to the poor should ESR. Depending on the form of energy, its result in an improvement in public welfare. consumption may be largely inelastic with Such reforms use SSNs to protect the poor respect to prices, at least in the short term. from the consequences of energy price By continuing to use the energy, households increases for the following reasons: may need to shift their resources from other essential needs to cover increased cost of • The poor already suffer from unacceptable energy. Direct welfare losses can also come levels of deprivation (absolute poverty from the decision to use less of a more is defined as having consumption below expensive energy product (price elasticity socially accepted minimum); increased different from zero). Indirect effects come prices will further impoverish them and from energy prices affecting all stages of increase likelihood of irreversible choices production of all other goods and services that would undermine their prospects for consumed, resulting in the increased price escaping poverty. levels of goods and services consuming the • Price increases will make some of the near- subsidized energy (see Good Practice Note poor fall into poverty, often resulting in 3 for discussion). irreversible losses that can have long-term Even though typically, the better-off consequences. households spend less on energy as a share • Participation in social safety nets increases of their income than the poor, the volume economic inclusion and is likely to produce consumed is greater, and hence they capture a boost to the economy that may mitigate a much larger share of total price subsidies against the short-term negative effects of flowing to households than the poor. The poor, reform on economic growth. even though typically capturing a smaller share of total subsidy, often spend a larger 5 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM proportion of their total expenditures on by ESR (intensive users of some energy—such energy than the better off, making them more as in the transport sector) or the middle vulnerable to energy price increases. Even class, even though they will not become poor when they do not spend much on commercial following the ESR, may become politically energy—for example, if they are not connected necessary. These mechanisms may take to electricity and consume little commercial many different forms, and will be reducing fuel, as in some low- and lower-middle- the potential fiscal savings. While providing income countries (especially rural, or peri- support to other social groups and sectors urban or informal settlements)—they may be may be required to ensure the success of affected much more strongly by the impacts the reform program, this should not come of increasing energy process on inflation and at the expense of the poor. Fiscal savings overall price levels (indirect effects). Such should not be taken as the main criterion inflationary effects are particularly painful determining reform strategy. Ultimately, for the poor, and may lead to an acute drop the objective of ESRs is not to balance the in living standard. If poor households are budget, but rather to ensure better economic reliant on electricity or district heating—as are prospects, greater economic efficiency, and many urban poor in Europe and Central Asia more equitable distribution. Therefore, even (ECA) or the Middle East and North Africa though broad compensation packages may (MENA)—they could be directly impacted by be part of feasible reform strategy to ensure ESR. Both quantitative and qualitative analysis their success, adequately supporting the can help understand patterns of energy use poor is an important requirement in ESR to and how different categories of the poor may achieve their ultimate objectives. Without any be impacted (see Good Practice Note 3 on accompanying or mitigating measures aimed the quantitative analysis and Good Practice specifically at the poor and vulnerable, ESR Note 4 on the use of qualitative approaches). will lead to an increase in the poverty deficit for those who are already poor, and will make Governments looking for ways to reduce the some near-poor household fall into poverty. fiscal burden of subsidies without harming low-income households can do so while Therefore, a “package of reform” for ESR can protecting the poor by utilizing effective be rather complex and costly in the short term, social safety net programs. By doing so, but it will enhance society’s welfare in the long and focusing on the poor and near-poor, term. No matter how the reform is structured governments can achieve significant savings. and financed, it is important to ensure that However, it is important to recognize that the support to the poor is adequate: all or most potential savings from the ESRs by cutting the of the near-poor and poor must be covered subsidy to the better off may not be available by mitigation measures that provide sufficient to be spend on education, health, and other support. Excluding some of the poor from budget purposes. Moreover, some of the these schemes would be unjust and would countries with the largest energy subsidies reduce public support to the reform. From are major oil producers (MENA is a case in this point of view, exclusion errors (those point), where the recent oil price collapses eligible for assistance that are not receiving (since end-2014) have wiped out the large any support) are way more harmful than potential savings from ESRs. Finally, some inclusion errors (providing support to those form of assistance for other groups affected who are not poor or vulnerable). The need to 2. WHY FOCUS ON SSN READINESS FOR ENERGY SUBSIDY REFORM? 6 stay within fiscal constraints while ensuring include those not currently served by the complete coverage of the poor imposes SSN system? (These questions are covered strict requirement on the design of the SSN in this note). measures that accompany ESR. 3 | How to provide timely benefits that avoid The task to protect the poor against energy drastic changes to the living conditions price increases, which can result from a for the poor? This requires accurate subsidy removal, is no different from the sequencing of reforms, forecasts for objective of protecting the poor against changes in prices, assessment of agility any economic shock, especially other price of social safety nets, and the ability to shocks. Safety nets are not only needed in constantly monitor the situation and to times of ESR, they are needed permanently, make rapid adjustments. (These questions since economies will always remain exposed are partly covered in this note and partly to shocks and fluctuations. For this reason, in other ESRAF notes.) most countries in the world already have SSN It is important to note that not all reforms in programs in place, and typically continually the past have used these simple rules. While reform them to improve coverage, adequacy, the need to protect the poor from the shock and efficiency. ESRs provide governments of subsidy removal (and from energy price with the opportunity to enhance their SSNs volatility) is well known, often subsidies are and make them more adaptive and flexible. removed without a mechanism to support The question that most policy makers face, the poor being put in place: an IMF report then, is how to use existing social protection on early experiences in ESRs states that programs to respond to ESR specific shocks, in only nine of the 28 cases analyzed were without undermining the long-term objectives social safety nets used to mitigate negative of building a coherent and sustainable SSN impacts of the reforms, and in an additional system. The specific questions for a coherent SSN response are the following (covered in ESRAF notes): Good Practice Note 2 helps provide guidance on how much fiscal space 1 | How to ensure that there are adequate governments have to finance the resources allocated to the SSN to transition period during ESR. The note compensate the poor from the losses helps identify the room governments triggered by the ESR? This requires have for higher fiscal deficits and accurate assessment of the welfare public debt needed to fund an ESR consequences of price changes associated program while maintaining fiscal with ESR (covered in Good Practice Notes sustainability. When expanding 2 and 3). o r i n t ro d u c i n g SS N m e a s u re s , 2 | What programs and mechanisms should governments should get a clear be used to transfer the resources to the sense of both the short-term and poor, and what form should this take? long-term costs of the chosen SSN How to assess the readiness of different intervention and ensure the fiscal parts of the SSN system to transfer these space is available for these programs. resources to those in need, and how to 7 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM eight cases, near-cash transfers or retargeting rising from 0.5% of GDP to 3–4% of GDP by of subsidies to the poor was implemented 2010. A good deal of these public expenditures (Clements and others 2013). This was closely benefits non-poor people. In comparison, correlated with lack of capacity of existing the IMF has estimated that a comprehensive safety nets to provide adequate response. conditional cash transfer program would have The lack of capacity was also evident in a cost Senegal around 1% of GDP (IEG 2011). global response to the food and energy crisis In subsequent years, the government with of 2008–10 that revealed the weaknesses of support from the World Bank has launched social safety nets, especially in the poorest a major cash transfer program, which was countries. A poll of IMF country desk officers expanded by 2016 to cover most of the with responses for 146 countries in the context extreme poor (World Bank 2017). Similar of the global food and energy crisis showed efforts were taking place in other countries that 84 countries had reduced food taxes in Sub-Saharan Africa, South Asia, and East and 29 had increased food subsidies (IMF Asia (World Bank 2017). 2012). Thirty-seven had decreased energy taxes and 29 had increased energy subsidies. New rounds of ESRs can be supported better In contrast, only 39 countries had expanded by new SSNs. In addition, there is a greater targeted safety nets. This tilt toward broad political buy-in to use social protection tax reduction and subsidy measures was measures as part of successful reform unfortunate, since those measures are often strategies. Recent stock-taking of policy regressive, distortive, costly, and difficult to advice in ESR (Feltenstein 2017) has found change in the future. that in 7 out of 11 recent representative reform cases, policy commitments by authorities to There is a global shift toward wider use of reform the energy subsidies was accompanied SSNs to respond to shocks and alleviate by expansion of targeted social safety nets poverty. Realizing the inefficiency of response as part of the mitigation package (most to shocks in the 2008–10 crisis, many countries important cases are Bangladesh, Egypt, have invested in expanding their SSNs. For Indonesia, and Jordan). The share of IMF example, in common with many other African advice to reform subsidies including concrete nations, Senegal had experienced sharply recommendation with social protection increasing international prices for both measures increase after 2013 to reach over energy and imported food starting in 2008. 60% of all Article IV recommendations to In response, the government has extended undertake ESR. Strategies relied primarily on general price subsidies on critical staples, scaling up existing cash transfer programs such as rice, wheat, and milk, and on fuel and or rapid launch of new temporary programs. electricity. These policies were expensive, 3. OPTIONS FOR UTILIZING SOCIAL SAFETY NETS DURING ENERGY SUBSIDY REFORM 8 3. OPTIONS FOR UTILIZING SOCIAL SAFETY NETS DURING ENERGY SUBSIDY REFORM What limits the utilization of the modern affordability of energy, near-SSN measures social safety net instruments in energy (vouchers or subsidies) are used. Lifeline subsidy reforms? The main reasons for the pricing—which can be used for electricity, low utilization of cash social safety net natural gas, and district heating—might instruments are (a) insufficient capacity to be effective if the poor are connected to cover all poor and vulnerable by the existing the electricity network and have individual cash-based safety nets through benefit metering systems. In these cases, using top ups or scale up of enrollment, and (b) volume-differentiated tariffs limiting subsidies difficulties with administering the launch only to those whose consumption is below of new safety nets amid ESR measures. the lifeline block size can be a way to support Because of the institutional inertia and need the affordability of socially acceptable minima for robust delivery mechanisms of any SSN of energy consumption to the poor, although program, the adjustment and expansion of the risk of facing a much larger bill as a result SSNs cannot be done overnight, even when of exceeding the limit by even 1 kWh can be there is the fiscal space to do so. Hence, the problematic if there is a large difference in unit design of mitigation measures should always prices from the first block to the next. Further, start with the assessment of available SSNs, there are inefficiencies associated with such and then move to the feasibility of launching cross-subsidies (introducing multiple pricing new measures. for the same service leads to distortions), poor targeting (low electricity consumption is not In the face of inadequacy of existing cash- a perfect predictor of poverty) and therefore based SSNs other mechanisms are often lifeline rates represent second-best options used to mitigate negative effects on the (see Tesliuc and others 2014). Targeting is poor. Among them are targeted energy even more problematic with liquid fuels, subsidies (such as targeted lifeline tariffs; which are all too easy to divert to ineligible see box 2). In many countries, the poor have beneficiaries. As a result, there are many cases constraints in affording what is deemed as of failed “targeted” liquid fuel subsidies, and a “socially acceptable” minimum supply of few successful examples. energy resources. To improve access to and 9 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM BOX 2: POVERTY, ELECTRICITY LIFELINES, AND AFFORDABILITY OF ELECTRICITY In many developing countries, cross-subsidies like increasing block tariffs or lifeline tariffs are used to target energy poverty. However, the use of these measures to support the poor can be problematic. First, increasing block tariffs, where households that consume larger amounts pay more are not well targeted by design. There is only a poor correlation between electricity consumption and poverty, and some groups among the poor in some seasons may need to use more electricity (such as for heating in many ECA countries). To cover the underpayment by the lower-volume consumers the collections from medium and large consumers (industries in the latter case) are used to cross-subsidize. From the economic efficiency this is inefficient, as unit costs of supplying to small consumers are higher than to the high-volume consumers. Lifeline tariffs (or telescopic tariffs) are measures where governments provide or subsidize electricity at a reduced price for those consuming less than social minima or a certain amount of electricity per month and/or are considered poor. If the selection of the target group to lifeline is based on objective criteria, such tariffs can be targeted as well as the cash transfers. But the question arises when it is combined with the consumption of the social minimum as a targeting criterion. Then it tends to suffer from large exclusion errors, since many of the poor tend to consume more than such minima. If it is simply paying for a given quantity and everything above is priced with regular tariff, this design flaw disappears, but there is still both the effect on distorting the incentives (to report consumption below the minimum) and political pressure to increase the lifeline limit. Often lifeline tariffs are introduced on top of already subsidized prices, even further distorting the tarification and incentives. There are several challenges. One is resisting the political pressure to increase the lifeline block size. Another is reliance on rising block tariffs rather than volume-differentiated tariffs. The former benefit all consumers, the rich and the poor alike, whereas the latter benefit only those consuming little. Yet another is that effective implementation of lifeline rates depends critically on individually and accurately metering each customer. For example, in 2012 in Serbia average electricity tariffs to households were below cost recovery levels by about 50%. In addition, households consuming less than 350 kWh per months were benefiting from 35% discount on already low tariff. In Pakistan, in 2015 the tariff structure was based on “slabs” of monthly household consumption (1–100 kilowatt hours (kWh), 101–200 kWh, and so on), with the unit cost of electricity increasing from one slab to the next. A highly concessional “lifeline tariff” is provided to households that use less than 50 kWh per month, leading to significant corruption, meter tampering, and so forth (Walker and others 2016). In much of the developing world, lifeline tariffs would not be an adequate response to concerns about energy affordability. In many cases, this is because connecting a building to the grid for the first time can be costly, and extending the grid to a new location certainly is. In many countries, the initial connection cost can be several times the average household income and much more for the poor. Unaffordable connection fees lead to multiple connections to a single meter, making several poor households appear as one rich household to the utility and depriving them of the benefits of lifeline rates. A few countries have taken more indirect eligibility threshold for these subsidies was ways of alleviating hardship among poor raised by 50% to increase the coverage of households of higher energy prices. In these programs in the face of price rises. Vietnam, for example, poor households The Philippines increased the coverage of its are entitled to free health insurance cards, subsidized health insurance targeted to the exemptions of education fees, and access poor at the time it was implementing energy to subsidized credit, among others. During subsidy reform. the Food Energy and Financial crisis, the 3. OPTIONS FOR UTILIZING SOCIAL SAFETY NETS DURING ENERGY SUBSIDY REFORM 10 Four possible approaches can be used when subsidies on gasoline in Morocco5 and Tunisia). compensating the poor for welfare losses In the case of an adaptive SPL system, the resulting from higher prices, including those assumption is that the relevant SSN programs induced by ESR. Figure 2 highlights the should have the financing and the delivery available options. In many cases, a combination mechanisms to absorb additional entrants and of these approaches is used. additional cost to the existing beneficiaries through indexation of benefits (such as in OPTION 1 does not involve introducing new Germany, the United Kingdom, France, and cash transfers or expanding the coverage or a number of other OECD countries). generosity of existing SSNs in ESR reform process.5 This option could be used if policy OPTION 2 would increase the benefit level makers deem that the reform processes has in selected existing SSN programs. This is the insignificant welfare impact. Such approach preferred, most direct and effective option seems to dominate in countries that do not if—and only if—the programs already cover the have at-scale SSNs or sufficient capacity to majority of the poor and have the capacity to launch the new or expand existing SSNs at absorb a reasonable number of the new poor. the time of the reform or in countries where This option is particularly relevant in countries the incremental increases in energy prices where there are existing programs with high were not too large and were not significantly coverage, but low benefit levels (for example, affecting the poor (several rounds of removing at the time of writing, Azerbaijan, Egypt, the FIGURE 2: Possible Approaches for Social Safety Nets during Subsidy Reform 4 New program(s) introduced “+SSN” 1 Do not use SSN “0 SSN” Options for the use of SSNs to 2 Benefits of Programs increased support ESR “SSN $” 3 Social Safety Nets Programs Reformed “ΔSSN” 11 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM Philippines, and Russia). It was used during This is often the most difficult option, but at several rounds of energy reform in Romania times the only viable strategy. International from 1997 to 2007 by increasing the heating experience suggests that SSN programs benefit in line with the increased price of can be introduced relatively quickly. The energy.7 If the assessment in Step 3 highlights classical example of using such option is the that existing SSN programs perform well and 2005–08 subsidy reform in Indonesia,10 the coverage is high, this can be a viable option. 2013 LPG subsidy reform in India11 or, more recently, Jordan’s temporary compensation OPTION 3 would expand the coverage of an as part of the 201212 and 2018 reform efforts. existing program to cover a sufficient share Administrative reform that introduced a new of the poor and vulnerable. Well-functioning program (HUS), which dramatically expanded programs can be expanded through its coverage, was used in the recent ESR geographic expansion or additional outreach. efforts in Ukraine.13 This often requires changing the rules or reform existing programs (such as improved Figure 3 shows a categorization of the four targeting, eligibility checks, or oversight). potential SSN approaches by energy subsidy The difficulty in using this option is that the reform episodes (see annex A for the list of additional needs of the poor who are already references for these episodes). Based on covered by the program have also been a stock-taking of subsidy reform episodes, addressed while expanding it, which poses we see that governments seldom increased a heavy demand on administrative capacity. the benefit level for current beneficiaries. The experience shows that such expansion This points to the fact that many SSNs are and increase in adequacy of benefits can not considered dynamic or “adaptive” in occur very fast, for example, the programs responding to the planned economic shocks. in Tanzania, Senegal, and Indonesia have Furthermore, it may point to issues related expanded from covering 5–10% of the poor to to coordination of SSNs to subsidy reform more than 50% of the poor in a space of 2–4 measures. In countries where major subsidy years. The ESR in the Dominican Republic is an reforms are undertaken, we note that a example. It used a pre-existing CCT program new program is introduced or a significant and massively expanded it to mitigate the alternation in SSN programs is employed. impact of electricity and LPG subsidy reform For new programs, we see both temporary on the poor. 8 In other countries (such as schemes (for example, Indonesia, Iran, and Jordan and Tunisia), the expansion of existing Jordan) and new SSN programs introduced. targeted SSNs (PNAFN [National Program One encouraging observation is that in a of Assistance to Needy Families] and NAF, number of countries, we see that countries respectively) to support earlier rounds of have implemented partial subsidy reform, but ESRs was considered infeasible.9 future SSN measures are planned to ready country systems for future subsidy reforms Under OPTION 4 , governments introduce (for example, Algeria, Morocco, and Tunisia). a new program that has to expand very rapidly to cover the poor and vulnerable. 3. OPTIONS FOR UTILIZING SOCIAL SAFETY NETS DURING ENERGY SUBSIDY REFORM 12 FIGURE 3: Countries’ SSN Options to Respond to Energy Subsidy Reform (by year) (1) SSNs not used / no new SSN mitigation measure Algeria (2016) Bolivia (2010–reversed) China (2010) Kenya (2000–08) (2) Benefit level increased Mexico (2005)a Indonesia (2008)b Morocco (2012–15) Jordan (2008) Peru (2011) Tunisia (2012–13) Turkey (2005)a Uganda (2012) Yemen (2011–12) (3) New SSN Program introduced Armenia (1995–99) (4) SSNs significantly program altered (such as eligibility, benefit level, and Brazil (2002) regional or categorical coverage) Egypt (2014) Ghana (2013) India (2012) Indonesia (2013)b,c Indonesia (2005)b Indonesia (2014)b Iran (2010) Indonesia (2016–present) Jordan (2012–discontinued)b Ukraine (2016) Nigeria (2012) Yemen (2010) Pakistan (2009–10) a. In these countries, government authorities relied on existing SSN programs to support the poor and vulnerable from the impacts of reform. b. In these countries, government authorities are using just-in-time temporary cash transfer programs. c. In response to reforms Indonesia in 2014, the government relied primarily on disbursements through the temporary cash transfer program BLSM. However, reforms also included an expansion of the existing conditional cash transfer, the Hopeful Family Program (Program Keluarga Harapan, or PKH), rice subsidies, and education subsidies. Sources: See annex A for a description of each country case and list of references. The following case studies—not all of which coincided with a period of economic necessarily concern responses to ESRs— growth and improving standards of provide a brief overview of some of these living, helping reassure the public that approaches: reforms were moving the country in the right direction. The Turkish • Countries that choose not to implement government provided a tax exemption new SSNs: for public transportation, allowing • A large part of Turkey’s energy subsidy public transport companies owned and reform process did not rely on providing managed by municipalities, villages, support to households. ESR reforms or special provincial administrations 13 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM to be exempted from value added • In the Philippines, the flagship Pantawid tax and excise tax. In addition, a tax Pamilyang Pilipino Program (4P) was rebate was introduced by the Ministry expanded and was used to provide of Agriculture in 2007 to help farmers support to vulnerable households grow specific crops. The amounts of in poorer parts of the country. In aid for these farmers was calculated times of significant price shocks the based on the area of the land used 4P program has been utilized as an in growing specified crops, and paid effective temporary measure to support according to a schedule defined by the vulnerable populations, such as in 2008 cabinet. Finally, Turkey already had a when in the wake of the global financial functioning SPL system (SRMP) that crisis, the government temporarily was already effective in reaching the expanded the program’s eligibility poor. The system included a rapid relief criteria. component to reach vulnerable groups • Egypt increased the generosity of through existing channels in times of its existing food subsidies scheme in price shocks. Given the existing strength addition to the introduction of a newly of the system, no new SSN measures targeted elderly benefit and conditional needed to be implemented. cash transfer program (discussed • Saudi Arabia is an example of a below). The policy increased the benefit resource-rich country burdened with amount of food subsidies provided in high subsidies to water, electricity, and the form of food ration cards. More gasoline. The country relies heavily on than two-thirds of households in Egypt water desalination plants because of benefited from the ration cards program. severe water scarcity—which in turn • In Indonesia , to protect the poor makes water extremely expensive to households from the 2008 subsidy deliver to consumers. In 2014–15, the reforms, the government also expanded share of water and energy expenditures three existing social protection for an average family remained three programs: the conditional cash transfer times greater than it was for the richest program (PKH), scholarship program families. In 2015, Saudi Arabia moved (BSM), and the Rice for the Poor forward with subsidy reform of water Program (RASKIN). with little support to poor households. • Countries that reformed SSN to achieve • Morocco and Tunisia around 2012–14 the scale up during ESR: made some adjustments to gasoline prices to reduce the degree of • Ukraine provides an excellent case study subsidization without additional on how countries can use momentum support to households and focused from energy subsidy reforms to expand on communicating the need for reform social safety nets. In April 2016, the and its equity aspects. government passed a resolution that set residential and industrial gas • Countries that choose to expand existing prices at the same “import parity” SSN measures: level, thereby eliminating subsidies for gas. In addition, in July 2016 tariffs for 3. OPTIONS FOR UTILIZING SOCIAL SAFETY NETS DURING ENERGY SUBSIDY REFORM 14 hot water and central heating were to support the poor households and nearly doubled, and electricity prices mitigate the impact of the subsidy are also on a stepwise increase. The reforms in 2010. Learning from the 2005 decisions were initiated to reduce the reform efforts, where expanding social budget deficit and meet requirements assistance took almost three years to set by the IMF. The government used be approved and implemented, in the the reforms as justification to prepare 2010 reform, the government managed SSNs prior to energy prices increasing to increase coverage of the existing to mitigate the impact on poor and cash transfer by 50%. vulnerable households. This is especially • In Ghana, the government introduced pertinent to the reform of gas subsidies several programs to mitigate the because the price of heating and hot impact of the energy subsidy reforms water in Ukraine is determined by the on the poor households. In 2013, the price of gas. The government increased government raised the price of kerosene spending on the Housing Utility Subsidy by 15% and LPG by 50%, and showed program (HUS)—which provides social great intent in substantially reducing support for utilities payments for low- the large subsidies for electricity. The income households, and for the energy reform’s impacts were partly mitigated privileges program—which provides by a 17% rise in the minimum wage similar assistance, but targeted to and an expansion of the cash transfer specific categories of the population—to program (Livelihood Empowerment Hrv 24.4 billion in 2015, and Hrv 40.3 Against Poverty, or LEAP) from 100,000 billion in 2016 to diminish the impact of to 150,000 households. the gas price increase. Every household was provided with an application • Countries that launched new SSN programs form to apply for HUS. During the to cover the losses of the poor: winter of 2015–16, 36% of households • Armenia introduced a Poverty Family participated in the program. To improve Benefit (a means-tested cash transfer targeting, a central monitoring system program) during its electricity sector of the characteristics of households reforms in 1995–98, in addition to participating in both programs has abolishing the lifeline tariff and been initiated to track benefits and introducing an entirely new tariff consumption levels across the income structure. While not initially intended distribution. Other mitigation measures to support the households against were also enacted to offset the transition price hikes, the program helped to market-level gas prices. The Cabinet the beneficiaries maintain their real of Ministers increased the minimum consumption in the face of higher wage by 6% in May 2016 and by 10% electricity bills, and spurred energy in December 2016. The cabinet also efficiency and higher collection rates. eliminated a tax on pensions lower than Additionally, and with the direct intent Hrv 10,700 (US$431). of supporting the poor households, the • In Yemen, the government strengthened government offered two one-off cash the existing Social Welfare Fund (SWF) transfers to low-income households 15 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM (beneficiaries of the existing cash Sales and Tax Department (ISTD). The transfer program). By setting in place scheme covered nearly 80% of the dual meters (allowing households to population in its initial stage in late benefit from low tariffs during hours 2012. The unconditional cash transfer of off-peak loads to energy grid) for was not associated with any of the 5,000 low-income households, the existing social safety nets programs government managed to further soften in the country and ran independently the impact of the price hikes; in turn, based on administrative and reported this helped facilitate public acceptance i n f o r m a t i o n p rov i d e d t h ro u g h of the reform. on-demand applications from interested • In Egypt the Ministry of Social Solidarity households. (MoSS) was mandated to establish and • SSN measures were combined with other implement a new cash transfer program non-SSN measures to cover population in 2014—Takaful and Karama (“Solidarity groups beyond the poor (that is, transport and Dignity”)—with an emphasis on subsidies, Active Labor Market Programs building an effective targeting and [ALMPs]): efficient operational systems, reaching • The Philippines wanted to reduce newly identified 1.5 million households their subsidy program following price to be enrolled in the new program. shocks. Alongside the expansion of The program, which is envisioned to its flagship 4P (Pantawid Pamilyang replace the old Sadat Social Pensions Pilipino Program) safety net program, program, will expand in waves targeting the Philippine government, with the poor and vulnerable households using Department of Energy as the lead proxy means test (PMT) criteria. The implementing agency, introduced the program rollout is in waves governing temporary Public Transport Program the poorest governorates in the country (Pantawid Pasada). This was a targeted and expanding as the program business relief program aimed at the public process are strengthened. transport sector, which consisted mainly • Indonesia in 2005 and 2006 introduced of jeepneys (large colorful buses) and a temporary (two-year) unconditional tricycles, that cushioned the impact of cash transfer in conjunction with the high energy prices, given the cascading reforms. Subsidi Langsung Tunai was effect transportation has on other targeted to the poorest 35% of the vulnerable sectors of society. This population (well above the 16% poverty was especially important to jeepney line), to protect the poor and near-poor operators, since fares are regulated to minimize political unrest (Beaton by the government, and due to a lack and Lontoh 2010). The reform package of automated pricing mechanism to also included increased financing of adjust the fares to changes in fuel education, health and rural infrastructure prices, any fuel price increase would programs for the poor. have had to be absorbed by the jeepney • Jordan introduced the Fuel Subsidy drivers themselves in the interim period Cash Compensation Scheme, which between official fare adjustments. The was administered by the Income 4. HOW TO DETERMINE SSN EXPANSION 16 budget for the program was ₱ 450 that were legitimate franchise holders million (approximately US$10.4 million). with valid and current registrations were The government issued debit and allowed to participate in the program. smart cards to distribute support to • Both the governments of Ghana and approximately 1 million tricycles, as well Indonesia extended support to middle- as other vulnerable groups, such as class families as part of ESR packages. farmers and fisherman. The key findings Ghana eliminated fees for state-run of the Philippine experience are that the primary and secondary schools, set program was well received by many a price ceiling on public transport sectors (transport, politicians, and local fares, and invested in electrification. government) because it emphasizes In Indonesia, regional block grants the need for jeepney drivers to operate for education were introduced. Both legally and the need to be registered to countries increased funding for health receive subsidies. Only jeepney drivers care in poor areas. 4. HOW TO DETERMINE SSN EXPANSION Choosing between the four options presented directly consumed by households (gasoline, in figure 2 is driven by a three-stage analysis: kerosene, diesel, LPG, electricity, and district heating), but also indirect losses caused STAGE 1: Welfare analysis of losses caused by higher prices of other goods that use by ESR. energy products as intermediate goods in the STAGE 2: Stock-taking of functioning SSN production process. Assessing the welfare loss and near-SSNs, and modeling expansion caused by ESR, as well as the distributional options. impact, is a vital first step in understanding what type and level of SSN expansion needs to STAGE 3: Assessing the existing delivery take place. As explained in Good Practice Note systems for scale-up. 3, estimates of the total effect can be made by combining information from an input-output The rest of this note is structured around matrix with household budget data. These these three stages. However, stages 2 and 3 indirect effects, though harder to quantify than are the primary focus of this note and will be direct effects, can be significant. For example, covered in the greatest detail. The remaining Coady, Famini, and Sears (2015) estimate that stages are covered in other notes within the indirect effects would account for about 55% ESRAF framework. Stage 1 is covered in Good of the potential impact of the rise in fossil Practice Note 3. fuel prices, with significant differences by region depending on the energy intensity of STAGE 1: WELFARE ANALYSIS OF household consumption.14 In addition, other LOSSES CAUSED BY ESR indirect effects can be identified, including Higher energy prices imply real income losses increased exposure to fuel price volatility and due to the higher prices for energy products 17 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM the health and environmental impacts linked impacts and increase beneficial welfare to a shift back to biomass.15 impacts. However, they require time for the household to adjust, either through efficiency The degree of subsidization prior the reform programs (insulation, higher efficiency stove, is a rule of thumb to approximately establish or heaters) or switching to alternative fuel type the effects on the poor. For countries with high equipment. First-order, short-term effects are level of subsidies (5–10% of GDP and above, thus often interpreted as an upper bound on such as in Egypt in 2005, Venezuela, and Gulf longer-term adverse impacts. Cooperation Council [GCC] countries) removal of subsidies may trigger very significant price Often as a byproduct of expended modeling increases to households (multiple times, with one also get the overall inflationary impact large indirect effects) and increase poverty of the reform (for energy sources were dramatically if not accompanied by mitigation secondary effects are important). A number measures (and imposes huge demands on of tools are discussed in Good Practice Note the ability of social protection to cover the 3 that we don’t discuss in this note. Tools like poor). In most cases where subsidies represent SUBSIM can utilize household survey data to around 1–2% of GDP removal of subsidies create output that consists of disaggregated often results in increasing poverty, but the direct and indirect effect at household level. size of welfare losses is much smaller (for In cases without household survey providing example, 2–5 percentage points in countries disaggregated data by quintiles, the key as diverse as Ecuador, Madagascar, Pakistan, poverty indicators can be used to have an and Serbia) and more manageable through initial estimation of the magnitude of welfare either scaling up existing programs or using loss. The tools and methods discussed here are non-SSN mitigation measures. further highlighted in Good Practice Note 3. In order to be more specific and precise STAGE 2: STOCK-TAKING OF about the estimated cost economic modeling, EXISTING SSN AND NEAR-SSNS, using both household and economy-wide AND MODELING EXPANSION data is needed. Broadly speaking, one can OPTIONS distinguish three types of analyses: (a) general equilibrium analyses, incorporating both the The second stage in developing an appropriate direct and the indirect welfare effects of the response to mitigate the impact of SSNs reforms (Computable General Equilibrium is to assess the existing social protection [CGE] models); (b) limited general equilibrium, system and its coverage of the poor. The incorporating only a subset of the indirect first step in this process is to gain a holistic effects; and (c) partial equilibrium approaches view of the entire social protection and focusing only on the direct effect of reforms labor system currently in place. In a well- on prices and household real incomes. These designed social protection system, special effects are commonly considered the short- measures discussed here on tailoring social term impact of reforms prior to household and protection response to specific shock of producer responses. Household responses, subsidy removal are redundant. Adequate such as switching consumption away from indexation mechanisms should be sufficient price increased goods or toward subsidized to protect households from any price shocks goods, tend to decrease adverse welfare and increases in the cost of living associated 4. HOW TO DETERMINE SSN EXPANSION 18 with ESR, while employment policy measures monetary values (as opposed to a participation will help to adjust to labor demand changes. dummy) to compare the received transfers Such adaptive social protection systems are with the impact of removing subsidies on needed to respond to any shock—from natural welfare and poverty. If only participation disasters to economic fluctuations. If there dummies are available, administrative data is a system that adequately covers the poor, are needed to impute the values in the survey. and there are mechanisms for indexation built into its key programs, no additional Alternative methods to assess the impact actions are needed, and the analysis should of existing SSNs exist if a country does not shift to understanding the fiscal cost and have a household survey with detailed data sequencing of reforms. Many Organisation on SSNs (which is frequently the case). for Economic Co-operation (OECD) countries These include (a) utilizing information from that encountered oil price shocks in 1980s and administrative data on a country’s SSN 2000s relied on pre-existing mechanisms to programs and (b) make imputations in the mitigate the negative consequences of price household survey by introducing new variables shocks, while passing it on their economies. using information on the program eligibility conditions, distribution by areas or groups. In most developing countries, however, a When relying on detailed administrative data comprehensive SPL system is not yet in place. by program (on the number of beneficiaries As a result, the focus of analysis should shift and levels of payment), assumptions need to to existing noncontributory SSN programs. be made about targeting (such as what share Unlike social insurance, for example, these of benefits goes to poor vs. non-poor, by programs are targeted to the poor, and have quintile and region). In this case, it is important by their objective sufficient flexibility to serve to ascertain that the information on welfare as an instrument for protecting the poor and losses in the subsidy reform is available for redistributing resources in their favor. Very the same groups or levels of disaggregation. often, targeted cash-based SSNs may not have sufficient coverage of the poor, but there Social safety net performance is measured might be other programs that do cover the by a number of key parameters. These poor. Such programs, such as social pensions parameters include spending/budget, or social services, need to be closely examined number of beneficiaries, coverage, benefit/ at the next stage (scalability assessment) to beneficiary incidence, benefit size/adequacy, see to what extent they can be beefed up to and poverty/inequality impact. Coverage provide support to the poor. indicates the absolute number of program beneficiaries or percentage of the population Household surveys can be used to assess the or a given population group. Coverage is impact of SSNs on different welfare quintiles, very important because it indicates the size especially the poor and near-poor. For this of the program in both absolute and relative analysis to be most effective, a household terms. Household survey data reveal how survey with consumption levels of subsidized various population groups (for example, poor goods combined with data collected on versus non-poor) are covered by the same individual SSNs, social insurance, and labor program. Benefit level indicates the amount market programs is an ideal source. Transfers of the benefit, while benefit adequacy is a from social safety nets should be reported in measure of the relative benefit level. The main 19 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM purpose of estimating benefit adequacy is the household level. Various generosity to get some idea to what extent the benefit levels can be modeled. size is “small” or “large” in comparison to a 4 | Introducing a new SSN: Assign benefit need or benchmark (for example, poverty to targeted households using observable line, minimum subsistence level, minimum characteristics. Various generosity levels wage). Fragmented or small benefits fall short can be modeled. of achieving desired developmental effects. Coverage, in combination with benefit size/ Modeling the impact of these four options at adequacy, is determining the program impact various generosity levels will allow policy or its ability to reduce poverty or mitigate makers to conduct a cost-benefit analysis. the losses for the poor (see box 3 for more The analysis of various mitigation scenarios examples). needs to produce an estimate of the costs associated with accompanying reforms, and Once the performance of existing SSNs has to identify groups that are excluded from the been measured, steps can be taken to model existing SSNs or modeled on expanded SSNs. the various expansion scenarios. Tools such Often the assumption is made that the as ADePT and SUBSIM can be used to model targeting procedure will identify the poor the impact of a rapid scale-up of existing with 100% accuracy. Such programs do not programs, or even the implementation of exist in the world (Honorati, Gentilini, and an entirely new program. These programs Yemtsov 2015), and assumptions should be can simulate the impact on welfare after the made that are more realistic, mirroring ESR with modified SSNs (increased benefits, targeting performance of existing programs. marginal expansion, or introduction of new Once such realistic approach is taken, one program), impacts of increased coverage or can also identify what are the household new program applied to targeted households. characteristics of those bearing any residual The following four scenarios can be modeled: welfare loss of ESR, that is, falling through 1 | Expanding coverage using existing the cracks of the existing and proposed eligibility requirements: Apply the existing measures (to consider complementary benefit level to all households under additional SSN measures). Simultaneously, existing eligibility requirements. In many various eligibility criteria—categorical, countries, due to limited fiscal space or geographical, means-test, or proxy means- other limitations, not all those who meet test—can be simulated to test which will eligibility requirements are enrolled. This produce a stronger targeting performance would simulate full enrollment. in allocating a fixed budget and hence which will have the greatest impact. Examples of 2 | Expanding coverage by expanding the such detailed analysis for various countries eligibility requirements: Apply the existing can be found in Atamanov, Jellema, and benefit level to households meeting new Serajuddin (2015), Cuesta and others (2015), target criteria or simulating full coverage Ersado, Levin, and Sayed and others (2012), using existing criteria. Laderchi (multiple years, see Good Practice 3 | Increasing the benefit level: Multiply each Note 3 for references), Verme and El-Massnaoui benefit by the increase in benefit level at (2015), and Walker and others (2016). 4. HOW TO DETERMINE SSN EXPANSION 20 BOX 3: STOCK-TAKING SOCIAL SAFETY NETS IN JORDAN In Jordan’s ESR reforms in in 2012/13, the Government of Jordan (GoJ) undertook a stock-taking exercise to assess if existing SSNs in the country would be the best mechanism for compensating poor and vulnerable families from the impact of reform efforts. After a thorough review of the existing programs, the GoJ decided that the coverage and performance of existing SSNs did not meet the needs for rapid expansion. Instead, the GoJ decided to introduce a new temporary large cash transfer program, which was sequenced with the energy price increases. The Energy Subsidy Cash Compensation Scheme was dispatched to households earning less than JD 10,000 (US$14,000) a year, and covering about two- thirds of Jordanian households. Jordan’s tax authority (known as the Income Sales and Tax Department) developed a database in the context of establishing a temporary cash compensation scheme for a fuel subsidy covering almost 80 percent of the households in the country. This allowed consolidation of data from various public sources in a short time span in 2013. That system was the precursor for a more comprehensive information system of the National Unified Registry (NUR) that would allow information exchange and consolidation of data on clients of social programs in Jordan. Payments for the program were made automatically through the government payroll for public sector employees and pensioners, social security subscribers, and National Aid Fund beneficiaries. In the case of Jordan, the compensation scheme was overall a success. However, with the precipitous drop in fuel prices in 2014, the government made the decision not to continue with the fuel subsidy compensation program due to the falling fuel prices US$100/barrel. STAGE 3: ASSESSING THE EXISTING The Delivery Systems Framework is organized DELIVERY SYSTEMS FOR SCALE-UP around five key inter-related components or “building blocks” illustrated in figure 5. Stage 3, the focus of this note, aims to Assessing the capacity of each these building provide policy makers and practitioners with blocks is vital in understanding if the existing guidance and best practices in assessing SSN program can be utilized for rapid scale-up, the delivery system within a given country’s needs significant improvement or should existing SSN system. As already highlighted, be replaced. The five building blocks are as scaling up of existing programs can involve follows: increasing coverage or benefit levels, or both (figure 4). Coverage may be extended to 1 | The delivery chain. Most SSNs pass through reach individuals or families that had not common implementation phases along the previously been included, but which may delivery chain, including (a) assessing need additional support because of being potential eligibility, via outreach; intake vulnerable to associated ESR. Benefit levels and registration; and assessment of needs can also be “topped up,” either temporarily and conditions to determine potential or permanently, as part of the compensatory eligibility; (b) making decisions on who mechanisms for accompanying subsidy has a right to be enrolled in the program reforms. This section will primarily focus on (which take into account both potential scaling up of coverage, since this requires eligibility and other factors, such as fiscal significantly more capacity in a country’s space) and the benefits or service package; delivery systems than increasing the benefit and (c) carrying out the implementation generosity level toward existing beneficiaries. cycle of transactions (payments or service provision) and active case management 21 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM FIGURE 4: How to Scale Up Coverage or Benefit Levels Population Increase in Scalability beneficiary numbers component Regular Regular safety net program program beneficiaries beneficiaries Benefit Regular benefit Increase benefit Levels amounts (including counseling, conditionalities that serves as an intermediary between monitoring, and accompanying measures). citizens on the one hand and institutions Governance processes, such as grievance on the other hand, interacting all along redress, oversight and controls, and that delivery chain. They are also used for monitoring, also operate along that monitoring, reporting, and data analytics. delivery chain and are covered in some Information systems for social programs detail in the discussion of governance increasingly link to other systems aspects and citizen interface. for cross-checks and data exchange (interoperability). 2 | Institutions and governance. Another core element of delivery systems includes 4 | Citizen interface. “Citizen Interface” is the program-specific and broader the access point that potential or current institutions, governance, and financing beneficiaries have to SSN programs in the environment. Institutional aspects include different phases of program access and central agencies, horizontal and vertical delivery, as well as for queries, grievances, coordination, and partnerships with service and user feedback. providers (such as payments agents 5 | Performance monitoring, evaluation, and nongovernmental organizations learning, and adaptation represent another (NGOs). Governance aspects include important aspect of delivery systems, legal foundations, oversight and controls, such that both SSN programs and their monitoring and evaluation, financial implementation are regularly monitored management, citizen engagement, and and evaluated, with feedback loops to information policies. Communications improve overall performance. Performance cut across institutions and the client should be monitored for program outcome management system. indicators, as well as for systems inputs 3 | Information systems platform. Information and outputs and how they determine systems operate like an “invisible engine” inclusion (coverage, equity, accessibility), 4. HOW TO DETERMINE SSN EXPANSION 22 FIGURE 5: Key Building Blocks of the Delivery Systems Framework for SSN Programs Business Processes along the Delivery Chain Institutions Legal Citizen Service providers Interface Information Systems (e.g. payments (Local Level) agencies) Governance, O&C Financing Business Processes along the Delivery Chain Source: World Bank SPL Delivery Systems Global Solutions Group. efficiency (for citizens, service providers, containing key questions that can be utilized in and governments), effectiveness, and the assessment of a country’s delivery system. transparency. 1. Assessing the Delivery Chain To assess the capacity of a country’s delivery system, and its ability to support a rapid Although the design of SSNs can vary, expansion, the core building blocks need to most programs pass through a similar be assessed. A gap analysis of the strengths implementation phase along the delivery and weaknesses of existing systems, and chain. These include (a) Assessing potential prioritization and sequencing of actions eligibility, which involves the functions of and investments for filling gaps along the outreach, intake and registration (or updating way can be a great tool to do so. Attention of information if person/family is already in should be paid to strengths, as well as gaps program), and assessing needs and conditions; in capacity, since the performance of any (b) Deciding whether an applicant will be system is determined by its “weakest links.” enrolled, determining the levels of benefits, This “gap analysis” can also benefit from the and notifying applicants of these decisions; experiences and lessons learned from a range and (c) implementing the program by carrying of typologies and trajectories of delivery out payments and service transactions and systems for SSN programs in other countries. case management. The following sections will go through each of the building blocks in the delivery chain. Delivery Chain Mapping (DCM) is an important The recent and still developing application tool in assessing the robustness of the of the gap analysis are the assessment of delivery chain that involves identifying “who scalability of CCT programs in Indonesia and does what” and “when” for core business Nigeria. Annex B provides an assessment tool processes supporting the functions of the main implementation phases. The following 23 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM section highlights the key aspects of the contractors hired by the central agency) or delivery chain that need to be mapped while by local governments. providing some guiding questions to conduct this analysis. Assessment of needs and conditions involves systematic processes and methodologies for Outreach involves interactions to inform determining the needs of applicants (potential people about social programs, build awareness, beneficiaries) using various eligibility criteria and encourage potential beneficiaries to and screening tools for the purposes of apply. Outreach can also involve two-way determining potential eligibility for programs. communication to inform program design In many countries, this assessment is typically better by gathering inputs, views, and automated in Social Registry Information feedback from people and other stakeholders. Systems using software applications, since it involves managing large quantities of “Active Outreach” is often used to proactively information on individuals, households, and reach vulnerable groups that may otherwise socioeconomic status. In other countries, be uninformed about social programs or communities themselves determine potential their rights. eligibility based on “community-based targeting methods” and protocols. Intake and registration involves the process of collecting information to register potential Enrollment decisions constitute a distinct beneficiaries (applicants) for consideration phase along the delivery chain—and should for potential inclusion in SSN programs. not be confused with determining eligibility. Such information can include personal and Enrollment decisions depend on many factors. household identifying information (including These are not limited to the assessment of unique national identification); socioeconomic socioeconomic needs and conditions to information; and other information on determine potential eligibility from data from needs and conditions. This information can the social registry (or from community-based be gathered in many ways, including self- targeting). Other factors also come into play, reporting by citizens via the “front office” or such as fiscal space for coverage in the SSN via data exchange with other administrative program (that is, someone may “qualify,” information systems in the “back office” but may not be able to enroll due to limited (interoperability). Even with interoperability, all slots); geographic focus; and additional SSN programs require some sort of “application factors besides socioeconomic status, such form” to allow citizens to signal that they are as certification of disability or prioritization in need of assistance. In most countries, intake based on identified losses from subsidy and registration is decentralized to some “local reforms. Moreover, it is important to clarify representative,” which could take many forms, the institutional roles for enrollment decisions, such as (a) at local office, service window, which may be under the legal jurisdiction of or kiosk; (b) via mobile teams; (c) via social the central agency managing the SSN program workers and frontline staff or enumerators; or by local governments. and (d) via digital service windows. These local representatives (or offices) can be managed Establishing payroll encompasses the by central agencies (for example, staff or administrative activities undertaken to produce a payroll list on a periodic basis, 4. HOW TO DETERMINE SSN EXPANSION 24 thereby verifying and officially certifying instruct the bank to transfer funds to specific beneficiaries and the individual payments beneficiaries, or the Treasury maintains central they will receive. The payments administration control of the cash and sweeps idle balances module of an information system that from accounts held at commercial banks, supports program management establishes consolidating the government’s cash position payroll based on data from enrollment (with at the end of each day. links to conditionalities monitoring when applicable). The information system may be Distributing payments to beneficiaries linked to national social registry and national ID encompasses the activities undertaken by system systems. Payroll information includes a payment service provider (PSP) and the data on all individuals entitled to receive a PSP’s agents to provide manual or digital payment—for example, unique ID number payments to authenticated beneficiaries. and/or national ID number, name, location, Payments distribution may be manual or entitlement amount, and account. The central digital. In a manual approach, funds are agency, such as the Ministry of Social Affairs transferred electronically to PSP agent verifies the (monthly, bimonthly, or quarterly) accounts at the implementing level, and the payroll according to protocols and officially PSP notifies beneficiaries that their payments certifies the data to ensure the quality and have been mobilized for delivery. For example, accuracy of the data. These cross-checks can a national post office may deliver cash be conducted through interoperability with payments directly to beneficiaries at the the social registry and a national ID system local level. In cases where the distribution that links to other administrative information points are limited or beneficiaries reside systems across government, such as property, in remote areas, program staff may need vehicle, and civil registries. to withdraw cash from bank accounts and transport the cash to beneficiaries at local Managing payments involves the process of payment points. Clearly, oversight, controls, sending payroll transactions and payment and reconciliation functions are crucial. In instructions on a periodic basis to Treasury, digital approaches, funds are electronically which schedules payment instructions and sets transferred to bank or non-bank accounts, up funds flow to a payment service provider where the beneficiaries may withdraw the for the distribution of funds. The payment funds as cash or use them to digitally pay for instruction file is sent to the national Treasury, groceries or other items at established retail which reviews the transaction, enters the outlets. In both cases, the PSP will need to payment request and releases or schedules the authenticate the identity of the beneficiary, payment according to the provision of budget which could be carried out via a payment and subject to the availability of funds. In many gateway that provides interoperability with the countries, the Treasury operates a treasury national ID or biometric system. Distributing single account (TSA) that directly controls all payments is the likely phase that would be transactions and makes payments on behalf of most affected by scaling up, since capacity for the spending agency to the payment service the payments system to reach large numbers provider. In some countries, the Treasury may of new additional beneficiaries will be tested. either transfer budget resources allocated to a The ISPA Good Practice Note for Payments specific government agency to accounts held (Pulver 2016) provides a thorough assessment at a bank, and the government agencies then tool for assessing payments. 25 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM 2. Institutions and Governance institutional arrangements that have been supporting the program may, or may not, The second key building block is the be well prepared or suited to deal with the institutional and governance arrangements required changes. to deliver benefits and services. Institutional aspects include central agencies, horizontal Assessing whether the existing institutional and vertical coordination, and partnerships arrangements and capacity allow for rapid with service providers (such as payments scale-up of existing SSN programs is a two-step agents and NGOs). The legal framework covers process. The first step requires assessing the the use and governance of laws, and provides status quo of existing institutional structures, a foundation for the implementation of roles, and responsibilities related to the policy policies and programs undertaken to achieve definition and implementation levels of the strategic plans and outcomes. Governance social safety net program being considered aspects include legal framework, oversight and—most importantly—how these formal and and controls, monitoring and evaluation, informal institutions work in practice. Once citizen engagement, and information policies. an understanding of the status quo has been Communications cut across institutions and obtained, based on an assessment of existing the citizen interface. constraints, it is possible to speculate on the “elasticity” (or ability to adjust key institutions There is no single blueprint for these to the scale of programs they are governing), arrangements, however, that needs to be contemplating how the expansion will impact tailored to local realities, capacities, and each of them and what additional measures structures. In some countries, SSN programs would need to be taken to ensure smooth are largely centralized, with the central implementation. agency also managing local functions via deconcentrated local offices or through a Assessing the status quo involves assessing service delivery agency. In other cases, the two primary aspects of the institutional terrain: central government works in partnership with (a) who is responsible for the definition of local governments and other service providers, social protection policy, and with the existing with a clear division of responsibilities. legal foundation and organizational form of the social protection “sector” (policy-making Scaling up an existing SSN program, function); and (b) what are the systems in expanding its geographic scope and coverage place to deliver programs and services (the of beneficiaries, requires additional people, delivery function) to the public. resources, and information. While the program may have been operating—to varying degrees Understanding who is responsible for social of effectiveness—at the existing scale, scaling protection policy is a vital first step in up will most likely require covering more assessing the status quo. Different countries beneficiaries (possibly also across a larger utilize a variety of institutional arrangements geographical area), ensuring additional to support the definition and coordination of financial resources (either because of an social policy. In some instances, there may expansion in number of beneficiaries, increases be one central ministry/department/agency in benefit amounts, or a combination of both) (MDA) with mandate for policy making, and/or obtaining additional information. The delivery, and interinstitutional coordination. 4. HOW TO DETERMINE SSN EXPANSION 26 This is the case, for example, of the strong proximity to individual households, which can central MDAs in Brazil, Indonesia, Peru, and improve outreach, beneficiary identification, the Philippines, but also of more recent MDAs and enrollment. still in the process of consolidating capacity, such as in Guatemala. Alternatively, social Assessing the resources—monetary, protection policymaking may not have a information and systems, capacity—are dedicated body, but rather be the responsibility currently available is the second step in of a national multisectoral planning agency, assessing the status quo. For example, if the such as in Nepal and Pakistan. In most cases, program is already suffering from funding the reality lies in between these two, with shortages, it is safe to assume the expansion multiple ministries or agencies assigned to will also face adequacy of funding issues. If separate (although often overlapping) policy budget flows are unpredictable in nature, mandates and program portfolios, sometimes making it hard to meet obligations toward aided by interinstitutional coordination bodies. current beneficiaries in a consistent way, it is likely that the same issues would affect the Understanding the policy-making body’s program after the expansion. formal (de jure) responsibilities is not enough. Its actual (de facto) capacity, level of technical Understanding the availability of information capability, and financial and political clout are and data is also critical. If the current program what makes the difference in practice. It will be design relied on data collected some years important to qualitatively assess the existing ago, or only covers geographic areas level of cohesiveness of the government (such or the target population groups that are as the cabinet), as well as the relative power, currently served, but not the future target influence, and clout of the ministry or agency areas and groups, then those same data formally in charge of coordination. may not be the most appropriate source of information to determine details of expansion. Understanding the arrangements and systems If data are already available, an institutional in place to deliver programs and services question is relatively simple: does the agency (the delivery function) to the public, and responsible for using the data to implement what the roles of central and local levels are the program expansion have access to the in service delivery is also important. Many data and technical capability to make use of social protection programs require shifting them? If not, it is necessary to understand some degree of program implementation the institutional arrangement for additional responsibility to local governments, to data collection. Does the program rely on a nongovernmental public service providers, strong social registry? How regularly is this or to the private sector. In practice, central information updated, and who is responsible? government typically lead in policy-setting The mechanism used for data collection, and and financing, since safety nets are often not a its frequency will constrain choices available. high priority in social spending for subnational governments compared to, for example, health Assessing the existing human resources and education. On the other hand, local capacity, the current workload and distribution governments are frequently called upon to of tasks, ratio of field staff to beneficiaries and fulfill specific functions during implementation, to central level staff, and the use of technology instrumental to make the most of their is critical in the case of determining the 27 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM possibility—and sustainability—of a safety net as a bridge to intermediate between citizens expansion. This should be done at the central on the one hand and institutions on the and local (for example, citizen interface) levels, other. For program expansion, information as well as for service providers if these are systems with the appropriate functionality used (for example, as payment agents in the and capacity must be in place for “getting case of cash transfers). people in” and for “managing the program and supporting payments administration.” These Speculating on elasticity is the second information systems interface with broader step in the institutional analysis. It is vital to digital governance environment. understand the impact of a rapid expansion of SSNs (more people, money, and data) on Four basic architectural elements of Social identified constraints. This will help identify Information Systems must be in place: the most appropriate course of action and (a) information and data; (b) software assess the likelihood that the expansion can applications; (c) database management; be sustained. In the short term, it might be and (d) information and communication possible to identify mitigating measures technology (ICT) infrastructure. While the for each of the key constraints identified. In detailed architecture for these information the long term, it might be possible to also systems varies, information systems that influence these constraints by investing in support social protection programs include capacity building and infrastructure. However, each of these elements. the speed and scope of this will also be conditioned by their initial level and by the Information is the core input and output of prevailing institutional constraints. these systems. For getting people in, the main “inputs” to the social registry information The main issues to focus on during the system include various types of information assessment will be driven by context, and needed to determine potential eligibility speculating on the institutional elasticity of for social programs. The primary “outputs” the systems in place should be done on a of social registries are data that have been case-by-case basis. In the process, it is useful transformed into standardized formats or to identify and signal clearly (to stakeholders aggregations that permit assessment of needs and decision makers) which constraints will be and conditions against program eligibility beyond the control of implementing agency. criteria (such as means-tested incomes and Doing so early in the process will help to proxy means scores). Countries adopt a variety build consensus around the chosen strategy, of methods for collecting or curating the while allowing for an adequate—and timely— information needed to carry out registration assessment of risks. and eligibility determination functions. Some rely on information provided by citizens 3. Assessing Information Systems directly (self-reported information), and some draw on information from other administrative Information systems are one of the fundamental information systems via interoperability. For building blocks of a delivery system, and are managing programs and supporting payments crucial for supporting the scaling-up of a administration, the main “inputs” include program. They support key business processes data on eligible individuals and families, that all along the delivery chain, and they serve is, beneficiaries, as well as their national ID 4. HOW TO DETERMINE SSN EXPANSION 28 and accounts (bank or non-bank). The main provide greater choice and convenience to outputs are payroll and payment transfer beneficiaries on payment modalities. instructions to payment service providers and to beneficiaries. The architecture for database management varies significantly across countries, and there Respecting the principles of personal data is no one single model to follow. Information protection is becoming a critical aspect of systems are developed over time using different the design of these systems. The rise of the database management systems (DBMS), Internet and rapid changes in technology have and may be owned by different parts of an accentuated the virtual aspect of privacy. organization. As a result, data is frequently Various categories of personal information fragmented across several hardware, software, may be regarded as sensitive or critical to organizational, and geographic boundaries. personal security or social relations, and Several kinds of architectural models are thus considered private. When setting up possible for distributing databases to improve administrative information systems that store performance of database services, such as a and manage personal data, such as social centralized database management system or registries and beneficiary and payments a virtual or federated model. administration, it is important to ensure that the privacy of those individuals and families ICT infrastructure refers to composite hardware, is protected. software, network resources, and services required for the existence, operation, and Software Applications support key functions management of an organization’s information of information management to transform technology (IT) environment. It can be as and use the data. For getting people in, front simple as setting up IT equipment (servers, office software applications should in place to network, storage, power supply, and cooling), in support the interface with citizens and frontline a room onsite, or as complex as commissioning workers who may operate the application to a data center in a warehouse-style building. assist citizens. There must also be back office Several governments16 are moving toward a software application components to supports shared data center approach to manage the program and institutional administrators to time and cost of procurement, investment, transform and manage the data for eligibility and operations, and to achieve economies assessment, data management, and other of scale for government. Some governments functions. For managing programs and making opt for a cloud-based (infrastructure-as-a- payments, back office software applications service)17 approach to minimize procurement, must be in place for managing information investment, and operations costs, and to take on beneficiaries, and for supporting payment advantage of potentially unlimited computing gateways. Payment gateways are critical power, although this approach also entails to providing interoperability with relevant risks. administrative information systems, such as the national ID or biometric systems for 4. Assessing and Prioritizing Citizen cross-checks and authentication of data on Interface of the Delivery Chain individuals and families, as well as to hook up to a range of payment service providers to Another key building block for Delivery Systems is the “Citizen Interface,” which is 29 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM the point in which citizens (for example, payments, in addition to managing grievances applicants and beneficiaries) interact with and appeals. the system (or program) all along the Delivery Chain. The key phases for citizen Structurally, citizen interface can take many interface include (a) outreach, intake and forms. Intake and registration can be carried registration; (b) enrollment decisions and out in various modalities, such as (a) at a local notifications; (c) payments transactions; and office, service window, or kiosk; (b) via mobile (c) case management, grievances, appeals, teams; (c) via social workers, community and queries. agents, and frontline staff or enumerators; and (d) via digital service windows. They can be In many instances, the core constraint to managed by central agencies (such as staff or scaling up SSN programs is the lack of an contractors hired by the central agency) or by adequate network of access points for citizen local governments. Grievances and appeals are interface along the delivery chain. Citizen often handled through various channels, such interface is sometimes overlooked in relation as social workers directly (mobile or at local to the emphasis given to information systems offices), hotlines and call centers, and digital and broader aspects of institutions, financing, systems. Local offices can be managed by and governance. Citizen interface goes beyond local governments or by central agencies (with the discussion of central-local institutional staff or contractors). Payments distribution roles and gets into the specific systems for is another important “touchpoint” for citizen supporting these access and service delivery interface, and the modalities depend on the points, as well as user experience. That neglect payment methods used. Manual payments is controversial because ultimately the goal of are usually managed by program staff or SSN programs is to deliver assistance to the post offices. Electronic payments rely on the right people at the right times in a dynamic management of payments technology, which and effective manner. When a country is is usually outsourced to a third-party payment considering scaling up an SSN program to service provider (PSP,) such as a bank, a cover additional beneficiaries, frontline systems mobile network operator (MNO) or mobile need to be in place to reach citizens first for money operator, or a payment aggregator. intake and registration, then for distributing 5. CONCLUSION 30 5. CONCLUSION International experience shows that many the expansion of the SSN is deemed necessary, countries introduce SSN programs during it must fit into the fiscal space available. Third, subsidy reform in hopes of seeing SSNs as a introduction of the new large-scale program panacea for the political economy challenges (or expansion of an existing one) must be and welfare implications of the proposed administratively feasible, thereby abiding reform. However, when ESR is retroactively by the principles of good program design, used to as a trigger to implement SSNs, little including outreach, in-take, and registration, planning is possible. Instead, planning to utilize assessment of conditions and needs, SSNs to compensate the poor for the impact enrollment, payments while ensuring that of ESRs, and making the preparations to do institutions and robust information systems so, should predate ESR going into effect. are there to support the expansion of the SSNs. Finally, work on SSNs to support ESRs This note illustrates the need for policy makers provides options for policy makers to increase to first ascertain whether SSNs are needed, citizen engagement and improve the delivery given the proposed subsidy reform. Second, if of the existing programs. GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM ANNEX A: SUBSIDY REFORM AND PRIMARY MITIGATION MEASURES IN SELECT COUNTRIES Country SSN mitigation measure Source and year The government of Algeria did not implement any new mitigation measures in response to the 2016 round of reforms given the relatively small increase in energy prices that were involved, and the immediate impact on poverty Jewell Algeria of the increase in energy prices prescribed in the 2016 budget law was 2016 and 2016 deemed to be minimal. However, the government is working with the WB IMF 2016 to introduce a targeted cash transfer system to protect the most vulnerable households from the negative impacts of much-needed future reforms. Energy subsidy reforms in Armenia were accompanied with an overhaul Armenia of the existing SSN system. The launch of the cash transfer program, the IMF 2013 1995–99 Poverty Family Benefit program, was introduced and, unlike previous SSN programs, was means-tested. After the withdrawal of LPG subsidies in 2001, the government introduced a new conditional cash transfers program, the Bolsa Escola in 2001. The Brazil government also introduced a new LPG subsidy in 2002 to assist low-income IMF 2013 2002 families in purchasing LPG through a gas voucher. Eligibility was based on a means test. Both targeted programs were consolidated under a new national flagship conditional cash transfer program, the Bolsa Familia, in 2003. In 2010 the government implemented electricity price reforms. Poor and vulnerable households (with an annual disposable income of less than Y China Zhang and 5,000 in urban areas and almost no regular income in rural areas) were 2010 Qin 2015 supported by receiving 10–15 kWh of free electricity volume per month as a common service. The Ministry of Social Solidarity (MoSS) was mandated to establish Feltenstein Egypt and implement two new cash transfer programs—Takaful and Karama 2017 2014 (“Solidarity and Dignity”)—with an emphasis on building effective targeting World and efficient operational systems. Bank 2015 In 2013, the Government of Ghana introduced substantial fuel and electricity subsidy reforms, including raising the price of kerosene by 15% and LPG by Davis and Ghana 50%. To mitigate the impact on the poor, the government expanded the others 2013 cash transfer program (Ghanaian Livelihood Empowerment Against Poverty 2016 Program or LEAP) from 100,000 to 150,000 households. In 2012 India brought the price of LPG sold to domestic consumers up to Jain, the market level. The government developed a cash transfer, known as the Agrawal, India PAHAL–Direct Benefits Transfer for LPG (DBTL) scheme, to about 165 million and 2012 listed beneficiaries. The program was thoroughly revised in 2015. India’s LPG Ganesan subsidy is not targeted. It is available to all households, with the rich being 2016 asked to give up the subsidy voluntarily. In 2005, the Government of Indonesia implemented significant fuel subsidy reforms in response to the global rise in oil prices that began in 2004. To mitigate the impact on poor and vulnerable households, the government Indonesia introduced the Bantuan Langsung Tunai (BLT) program—a temporary World 2005 unconditional cash transfer program also known as Direct Cash Assistance. Bank 2012 In total, four payments were made to poor households over the span of one year worth around US$30 each. In total, around 19.6 million households— more than a third of the households in Indonesia—received support. Following a further round of fuel subsidy reforms 2008, the Government of Indonesia implemented another round of compensation measures. The Beaton largest measure consisted of two payments through the BLT unconditional Indonesia and cash transfer system at a reported cost of US$1.52 billion, reaching 19 million 2008 Lonotoh households. Additional mitigation measures included subsidized rice, loans 2010. for small businesses, and educational support for the families of lower- ranking civil servants and the military. 31 ANNEX A: SUBSIDY REFORM AND PRIMARY MITIGATION MEASURES IN SELECT COUNTRIES Country SSN mitigation measure Source and year In 2013 the Government of Indonesia implemented large-scale petroleum reforms combined with a Rp 29.1 trillion package of compensation mechanisms targeted at low-income households. The unconditional cash transfer previously known as BLT was renamed the Temporary Cash Transfer Program (Bantuan Langsung Sementara Masyarakat, or BLSM). The BLSM Inchauste Indonesia provided households with Rp 150,000 (US$15) per month for 4 months. The and Victor 2013 program was renamed to highlight the temporary nature of the policy, since 2017 it attracted criticism in previous years for being short-term and not seeking to promote a long-term exit strategy from poverty. The 2013 BLSM transfers were targeted using the new Unified Database (UDB), a targeting registry developed in 2012. Inchauste In 2014, shortly after the election, the Government of Indonesia launched and Victor Indonesia significant fuel-price hikes. Shortly after the price hikes, the government 2017 2014 began a new round of BLSM payments. In total, monthly BLSM payments were made to the poor over 6 months. World Bank 2016 Compensatory expenditure measures were taken to protect vulnerable Inchauste Jordan groups: (a) cash assistance to the poor in the private sector; (b) an increase and Victor 2008 in assistance provided by the National Aid Fund (NAF); and (c) financial 2017 support targeted at small-scale farmers. To mitigate the social impact of the subsidy removal, a cash transfer was introduced for families with an annual income below JD 10,000 Araar and (US$14,100) (who amounted to 70% of the population), based on self- others reported income levels. These transfers consisted of JD 70 per person 2013 Jordan per year (for a maximum six people per household), amounting to about 2012 Inchauste 6% of the income of the poorest decile. Public sector employees and pensioners, social security subscribers, and NAF beneficiaries received and Victor disbursements automatically through the government payroll. The program 2017 was discontinued. Although the government implemented significant energy subsidy reforms in 2017, Mexico already had a well-targeted social protection system Mexico Feltenstein (Progresa/Oportunidades/Prospera) that updated cash transfers annually 2017 2017 in line with inflation. As a result, authorities did not develop any new compensatory measures in response to reforms. In response to the gradual increase in fuel prices, the government of Sdralevich Morocco Morocco continued to strengthen its existing social safety net system, and others 2012–15 including the accuracy of their targeting. 2014 The primary compensatory mechanism introduced as part of Nigeria’s Nigeria Feltenstein energy subsidy reforms was the Subsidy Reinvestment and Empowerment 2012 2017 (SURE) Program that included a cash transfer program (SURE-P MCH). Coinciding with Pakistan’s 2009–10 energy subsidy reform, the Benazir Income Support Programme (BISP) was developed to provide compensation Pakistan to economically stressed segments of the population dealing with the IMF 2017 2009–10 spiraling prices of the essential commodities caused by subsidy reforms. The BISP provided support to the poor and vulnerable through monthly cash transfers to eligible households. Mitigating measures were not implemented, since reforms did not reduce Peru 2011 IMF 2013 subsidies for products most heavily consumed by the poor. No new SSN measures were implemented, since government authorities Turkey relied on existing SSN programs to support the poor and vulnerable during IMF 2013 2005 reforms. In response to ESR, the Government of Tunisia introduced an additional Sdralevich Tunisia lifeline electricity tariff for households consuming less than 100 kWh per and others 2012–13 month. In addition, the government introduced a new social housing 2014 program for vulnerable families. Uganda In response to the 2012 power tariff reform, the government developed a IMF 2013 2012 lifeline tariff for low-income consumers, consuming up to 15 kWh a month. 32 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM Country SSN mitigation measure Source and year IMF 2013 Yemen Impacts of the 2010 reform were almost simultaneously mitigated by a 50% Sdralevich 2010 expansion in the coverage of the Social Welfare Fund cash transfer scheme. and others 2014 There were no new mitigating measures introduced in response to the Yemen 2011–12 reforms, but the government did consider a further increase in the IMF 2013 2011–12 Social Welfare Fund coverage or the size of existing transfers. ANNEX B: ASSESSMENT TOOL FOR ASSESSING EXISTING DELIVERY SYSTEMS FOR SCALE-UP 1.ASSESSING THE DELIVERY CHAIN 1.1. Outreach 1 | To what extent are special efforts made to reach out to vulnerable groups and communities? 2 | Are there ethnic and language differences within a country that should be taken into account in developing the outreach strategy? 3 | Which agency or local government level is responsible for defining the outreach strategy? 4 | To what extent are various communications, media, and social media channels used to inform the population about social protection programs and the means to register? 5 | Are communities involved in any process of the outreach? Which processes? 6 | Do citizens know their rights, and responsibilities regarding social protection? Is it standard process to inform citizens of various aspects of their rights and responsibilities, such as the following? a. That registering for social protection programs does not guarantee enrollment in the social programs or awarding of benefits; b. How the intake and registration process works and what information or documentation will be required of them; c. How their information will be used and how they can access their information or query the system; and d. How and when they need to update their information. 7 | What kind of supervision and monitoring procedures are in place for evaluating the quality of the communication and outreach? 33 ANNEX B: ASSESSMENT TOOL FOR ASSESSING EXISTING DELIVERY SYSTEMS FOR SCALE-UP 1.2. Intake and Registration 1 | Which agency or local government level is responsible for intake and registration processes? 2 | What are the specific steps for conducting intake and registration, and who is responsible for carrying out—and supervising—each step? 3 | What application form would be used to support the expansion of the SSN program? Would this application allow for access to a single program or multiple programs? What form of ID and other types of documentation are required? 4 | What are the points of contact for citizens to file application forms? Where are interviews carried out? Are home visits required (for all applicants or some subset)? 5 | Are these points of contact available throughout the country—or at least among target populations for the expansion? 6 | Is access to registration open and continuous, whereby people can register at any time (usually through a digital service window for citizens)? Is there a specific open enrollment period? Or is it open throughout the year? Or is it open until user program slots (budget) are filled up? 7 | In the case of en masse registration waves, are households in locations-not- surveyed allowed to apply for inclusion in the social registry? 8 | Do households that are already included in the program need to update their information? 9 | Do applicants sign statements certifying veracity of information provided? Do they sign or otherwise endorse consent forms for use of their information? 1.3. Assessment of Needs and Conditions 1 | What are the main steps in determining potential eligibility for social assistance programs? 2 | Is the process automated within the social registry (via software applications)? 3 | Is the process for determining potential eligibility written up in any manual or guide? (Or the automated rules for calculating scores or aggregates?) 1.4. Enrollment decisions 1 | What factors influence enrollment decisions? 2 | What are the eligibility criteria based on socioeconomic status (assessment of needs and conditions)? 34 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM 3 | What other factors are considered? How do these relate to (a) definition of program objectives and the target population; (b) subsidy reforms (as compensatory measure); (c) geographic location; (d) other indicators of vulnerability (how measured, certified); and (e) fiscal space (and any implications for rationing of excess demand)? 4 | Are these criteria and the process for taking enrollment decisions written up in any manual or guide? 5 | Which institution (and responsible person) takes these enrollment decisions? 6 | How are these decisions documented for tracking, monitoring, auditing, and potential appeals? 1.5. Establishing payroll 1 | Which agencies are responsible for establishing, verifying, and certifying payroll? 2 | What information system (or module within a system) supports payments administration? Does it link to other administrative information systems, such as national ID or biometrics? 3 | Which agency is responsible for managing the information system module for payments? 4 | What information is needed to accompany and verify payroll? 5 | What are the steps for establishing payroll? How long do these steps take? 1.6 Managing payments 1 | Are payments managed through a treasury single account? If not, how are transfers of budget resources and cash managed? 2 | Particularly with regard to scaling up to cover remote and underserved areas, how are payment transfers to the local or subnational payment service providers or payment points managed through the treasury single account? 1.7 Distributing payments to beneficiaries 1 | Which agencies are responsible for overseeing payments distribution and implementing payment transactions to beneficiaries? 2 | How will beneficiaries receive their cash transfers? Manually? Digitally? In what specific form? 3 | What are the steps for payments distribution? 35 ANNEX B: ASSESSMENT TOOL FOR ASSESSING EXISTING DELIVERY SYSTEMS FOR SCALE-UP 4 | What are the procedures for authenticating identification for payments? What information tools support this? 5 | What is the schedule of payments? Monthly, bimonthly, quarterly? In the scenario of scaling up, would this payments schedule be maintained for all existing and new beneficiaries? 6 | How are beneficiaries authenticated at the payment point? 7 | What are the steps for payments reconciliation? Who carries this out? 8 | What are the auditing procedures? 9 | In the scenario for scaling up, what are the capacity gaps to support expansion in coverage? Do potential new beneficiaries have access to the payments distribution system? 2. ASSESSING INSTITUTIONS AND GOVERNANCE 2.1 Assessing the Status Quo 1 | Which ministries/departments/agencies are involved in social protection policymaking? 2 | Which, if any, has the formal authority and responsibility to lead SP policymaking and coordinate other agencies/programs? 3 | What is the institutional clout or power of the ministry or department that would be in charge of the expansion? 4 | Can the program exert enough power over needed actors? 5 | What are the implementation arrangements and roles of central vs. local levels? How concentrated or distributed the various core roles in program implementation among institutional actors? 6 | What are the political costs of relationship with local government? 7 | Are service providers (such as payment agents) involved? 8 | What is the existing grievance mechanism? 9 | Who is responsible for its administration and follow-up? 10 | Are budget allocations adequate or is the program suffering from funding shortages? 11 | How predictable is the funding (annual budget allocations) and flow of funds (during execution)? 36 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM 12 | What information was used to design the existing program? 13 | Who is responsible for collecting it? 14 | What is the speed or frequency of data collection? 15 | What is the existing human resources capacity (at the central and local level)? 16 | What is the ratio of field staff to beneficiaries, of central staff to field staff, of central staff to beneficiaries? 17 | Are there incentive schemes in place (for example, to local governments or actors involved in delivery)? 18 | What is the capacity to recruit and supervise (including regulatory hurdles)? 19 | Is current workload appropriate for size? 20 | Is there any suboptimal IT use? 2.2 Speculating on Elasticity 1 | Are there misalignments of vision or expectations at the cabinet or bureaucratic level that can affect speed or coherence of reform? 2 | At bureaucratic level, what is the planning process? Where does the ministry/ sector sit? 3 | What are additional coordination and implementation costs involved in mobilizing more bureaucracy? 4 | What are competing demands for fiscal resources given the broader political context? 5 | Can we guarantee predictability of annual allocations and fund flows during budget execution? 6 | If money is not a constraint, are there other bottlenecks? 7 | If subnational governments play significant roles in program implementation, does the decision-making process adequately take their views into account (without being captured by them)? 8 | Can new incentives be provided? 9 | What are additional coordination and implementation costs involved in mobilizing more bureaucracy? 10 | Will the expansion require additional financial burden by subnational governments, and if so, are they generally in a position to shoulder these additional burdens? 37 ANNEX B: ASSESSMENT TOOL FOR ASSESSING EXISTING DELIVERY SYSTEMS FOR SCALE-UP 11 | Does the existing implementation model facilitate or constrain the choice of a particular expansion (for example, if the province plays a central role, expanding into additional municipalities in that province may be more feasible than going into a whole new province)? 12 | If local governments are involved, are there disparities in capacity that would be highlighted? Political costs? If local governments are not involved, what other institutional arrangements should be created? 13 | Can additional service delivery staff be hired (including regulatory constraints)? 14 | If service delivery agents are involved, can the contracting arrangement be easily modified to support the expansion? Will new or additional agents be required? 15 | Does the expansion involve changes in program design and tools (for example, targeting and expansion to urban areas)? Do we have enough information? 16 | Can we collect it rapidly? Who is responsible? 17 | Can existing technology and information systems support an expansion? 3. ASSESSING INFORMATION SYSTEMS 3.1 Information 1 | What types of information are stored? 2 | What type of modalities are used for collecting information? 3 | To what extent are there defined protocols for data validation and data verification for the social registry, and are these protocols accessible to the appropriate stakeholders? 4 | Are there protocols to validate (through cross-check and logic) and verify the correctness of data sourced from other administrative information systems? 5 | What are the protocols when self-reported information conflicts with information existing in the social registry or other information systems? 6 | What are the protocols for personal data protection? a. Is there a documented information security policy and a policy for confidentiality of personal information (privacy)? b. Is there a set of standards for data access, data use/disposal, and data confidentiality? 38 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM 3.2 Software Applications 1 | Are there front-office software applications for citizens and social workers, facilitators, and mobile teams? 2 | Are there back-office software applications for administrators in central and subnational government agencies? 3 | What kinds of functionalities are available through the front-office software application? 4 | What kinds of functionalities are available through the back-office software application? 5 | How will these software applications be designed, developed, operated, and maintained? 6 | Is there a modular approach to software applications development and management? 7 | Will the software applications be built in-house or outsourced? 8 | Are there user guides for operating the application? 9 | Is training required and how will users be trained to operate the application? 10 | Is there an open source policy for applications development? 11 | How will technical capacity be built to ensure sustained support for the systems? 3.3 Database Management 1 | Who “owns” or “hosts” the database (custodian)? 2 | Which database technology platform is used to house the data? 3 | What is the current database size? 4 | Who manages the database? 5 | Is there an access control policy for the database? 6 | Is there a data management manual to establish data processing and data service protocols, particularly ensure data integrity and confidentiality? 7 | Does a data dictionary exist with information (or metadata) about data? 8 | How does the system generate reports and analytics? 9 | What are the modalities for data sharing with other institutions and information systems? 39 ANNEX B: ASSESSMENT TOOL FOR ASSESSING EXISTING DELIVERY SYSTEMS FOR SCALE-UP a. Does the dataset include a unique ID (or set of identifiers) for applicants and potential beneficiaries that can be utilized for interoperability and data sharing between agencies? b. Are there biometrics to identify applicants and to prevent duplication? c. Are APIs used for data sharing between agencies? d. Are there any feedback loops for data flows between the various components of the system? 3.4 ICT Infrastructure 1 | Describe the ICT infrastructure that supports the system. Is the infrastructure housed in-house (in a central place) or at a data center? 2 | Is the data center owned by the agency or by a vendor? 3 | Does the data center serve only the agency or is it a shared data center for some or whole of government? 4 | Is there a system Integrity and risk management framework? 5 | Are hardware resources sufficient or aging (based on a periodic review)? 6 | Is access to servers and network devices restricted, controlled and monitored? Are they protected from the elements (sun/sand/water/fire)? Are they in a climate-controlled environment? 7 | Are disaster recovery systems in place? In case of disaster, are there standard operation procedures in place? Have these procedures been tested? 8 | Are there connections to redundant power supplies, and arrangements for power interruptions? 9 | What kind of network strategy is used? 10 | What are the technology platforms upon which the information systems are based? 4. ASSESSING AND PRIORITIZING CITIZEN INTERFACE OF THE DELIVERY CHAIN 1 | What are the existing modalities for interfacing with citizens for each of these functions and processes along the delivery chain? a. Modalities: social workers, mobile teams, community focal points, local offices, call centers or hotlines, digital interface, payments. b. How permanent are these points of contact? How frequent? Static? Dynamic? 40 GOOD PRACTICE NOTE 5: ASSESSING THE READINESS OF SOCIAL SAFETY NETS TO MITIGATE THE IMPACT OF REFORM c. What is the geographic spread of the network for citizen interface? Does it reach all regions (districts, municipalities) of the country? 2 | What are the legal and institutional arrangements for citizen interface? a. Who is responsible for managing citizen interface for the various stages of the delivery chain (for example, intake and registration, payments, and grievances)? b. What about human resource management and supervision? c. Who finances the administrative costs of citizen interface for the various implementation phases? 3 | What are the service standards for citizen interface? a. Accessibility. b. Simplicity. c. Service standards and culture. d. Communications. e. Private cost implications for citizens to interface with the system: time, costs, visits. f. What is the user experience of applicants and beneficiaries along the delivery chain? What is the applicant or beneficiary journey throughout the process? (Use of beneficiary journey mapping tools can be useful.) 4 | What are the additional resources needed for citizen interface when a program scales up? a. What is the current caseload of frontline staff—and how might this change with scaling up? Are the “job descriptions” (roles, terms of reference, means of evaluation) for human resources on the front lines clear? How do they link to core functions along the delivery chain? b. What are the human and material resource implications for scaling up? What would be the contractual arrangements for adding human resources (staff, contractors)? What is the capacity to recruit and supervise additional human resources (including regulatory hurdles)? c. Can existing systems and infrastructure be leveraged to support the expansion? (for example, via local government offices, citizen service centers, or other programs?) d. If the program is to multiply in size (with coverage expanding, say, by a factor of 5), does this automatically imply expanding resource inputs by that same factor (5)—or can efficiencies be found through simplification, economies of scale, careful implementation planning to mobilize resources across regions, or by leveraging existing offices and infrastructure? 41 REFERENCES REFERENCES Jain, Abhishek, Shalu Agrawal, and Karthik Ganesan. 2016. DBTL Performance Evaluation: Insights from the World’s Largest Subsidy Benefit Transfer Scheme. Manitoba, Canada: International Institute for Sustainable Development. Araar, A., E. Le Borgne, U. Serajuddin, and P. Verme. 2013. An Assessment of the Jordan 2012 Petroleum Subsidies Reform and Cash Compensation Program. Report 79837. Washington, DC: World Bank. Atamanov, Aziz, Jon Robbert Jellema, and Umar Serajuddin. 2015. Energy Subsidies Reform in Jordan: Welfare Implications of Different Scenarios. Washington, DC: World Bank. 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Karippacheril, Tina George, Soonhee Kim, Robert Beschel, and Changyong Choi. 2016. Bringing Government into the 21st Century: The Korean Digital Governance Experience. Washington, DC: World Bank. Lakner, C., and C. Ruggeri Laderchi. 2016. Pulling Apart? The Growth of the Super-Rich in East Asia and Pacific and Its Implications for Inclusive Growth. Washington, DC: World Bank. Levin, Victoria, Matteo Morgandi, Joana C. G. Silva. 2012. Inclusion and Resilience: The Way Forward for Social Safety Nets in the Middle East and North Africa—Overview. MENA Development Report. Washington, DC: World Bank. 43 REFERENCES Pulver, Caroline. 2016. Social Protection Payments Delivery Mechanism. Inter Agency Social Protection Assessments (ISPA) Payments Working Group. Inter Agency Social Protection Assessments Partnership. Washington, DC: World Bank. Sdralevich, Carlo, Randa Sab, Younes Zouhar, and Giorgia Albertin. 2014. 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Examples include cash transfers (conditional or unconditional), public works, in-work benefits, unemployment benefits, sickness and injury, disability benefits, care-giver allowances, social pensions, contributory pensions, food stamps, housing vouchers or subsidies, utility benefits or subsidies, transport subsidies, birth-child-family allowances, maternity benefits, nutrition supplements, scholarships, and school feeding. Services include social services (such as intermediation, counseling, psycho-social support services, parenting and family services, child protective services, child care services, and services for at-risk youth), labor services (such as ALMP/activation services, training, and skills development), financial and productive inclusion services, and social and long-term care services for the elderly and disabled. 2 The overview of spending on SSN across countries is provided in World Bank (2017). Updated information can be found in the World Bank database, ASPIRE: The Atlas of Social Protection Indicators of Resilience and Equity. 3 Some forms of energy subsidies can be less regressive that others—such as subsidized LPG bottles that is used for cooking tends to have rather flat distribution, when all households use similar amounts or even progressive (when richer households use other forms of energy, such as electricity or gas connections). 4 Some forms of energy subsidy can be targeted—such as electricity bills can be subsidized for the poor, or subsidized LPG can be distributed to the poor using vouchers. However, targeting of network energy requires individually and accurately metering each customer in addition to resisting the political pressure to increase the lifeline block size, while any dual price regimes for liquid fuels creates incentives for smuggling and corruption. 5 Policy makers may instead opt for different quasi-monetary modalities related to targeting subsidies to selected groups (such as the introduction of lifeline tariffs or compensation to transport services providers to the reduce costs of operations after general increases in the price of gasoline). 6 Verme, El-Massnaoui, and Araar 2014. 7 World Bank 1997. 8 See Inchauste and Victor 2017. 9 See Araar and others 2013 and World Bank 2013. 10 Beaton and Lontoh 2010. 11 Jain, Agrawal, and Ganesan 2016. 12 See Araar and others 2013. 45 ENDNOTES 13 World Bank 2014. 14 Note that analysis using an input-output table, which has fixed coefficients and does not allow for substitution, including CGE modeling based on a social accounting matrix, is likely to significantly overstate the magnitude of indirect effects. As recognized by Coady, Famini, and Sears (2015), such estimates should therefore be considered short-term effects or upper bounds of the long-term effects. Note that a CGE model does not have to be based on an I/O table, although most are. 15 Recent evidence on the shift from fuels to biomass has been provided, for example, by the recent policy pilots in India, involving switching from in-kind to cash benefits for LPG and kerosene. Because of the specific design of those measures, household facing poor banking facilities and other barriers to accessing the benefit dramatically reduced their consumption of LPG moving to “dirty“ fuels (GSI 2012). 16 The Republic of Korea built a Government Integrated Data Center in 2005 for the entire government with more than 20,000 pieces of hardware equipment and a 30% reduction in data center costs. (Karippacheril and others 2016). 17 Parts of the U.S. government use cloud-based Amazon Web services as infrastructure as a service. 46 Energy Subsidy Reform Assessment Framework LIST OF GOOD PRACTICE NOTES NOTE 1 Identifying and Quantifying Energy Subsidies NOTE 2 Assessing the Fiscal Cost of Subsidies and Fiscal Impact of Reform NOTE 3 Analyzing the Incidence of Consumer Price Subsidies and the Impact of Reform on Households — Quantitative Analysis NOTE 4 Incidence of Price Subsidies on Households, and Distributional Impact of Reform — Qualitative Methods NOTE 5 Assessing the readiness of Social Safety Nets to Mitigate the Impact of Reform NOTE 6 Identifying the Impacts of Higher Energy Prices on Firms and Industrial Competitiveness NOTE 7 Modeling Macroeconomic Impacts and Global externalities NOTE 8 Local Environmental Externalities due to Energy Price Subsidies: A Focus on Air Pollution and Health NOTE 9 Assessing the Political Economy of Energy Subsidies to Support Policy Reform Operations NOTE 10 Designing Communications Campaigns for Energy Subsidy Reform