Peru : Social Safety Nets in Peru

Abstract

The report argues that the Peru's Social Safety Net (SSN) reform process needs to be anchored to a coherent national social safety net and poverty reduction strategy. The report suggests that the SSN interventions should be differentiated, as appropriate, between the urban and rural parts of Peru. For instance, workfare programs to deal with cyclical unemployment only make sense in urban areas; and a nationally-led small-scale infrastructure program (such as FONCODES) only makes sense for rural areas. The Report also argues that the implementation arrangements for the SSN strategy should be differentiated for rural and urban areas, due the differences in capacity between the municipal administrations in the major cities and the rest of the country. In the 30 biggest cities, SSN programs should be decentralized, to ensure better responsiveness to local needs and improved transparency. In the rest of the country, for the foreseeable future, strong national agencies will be needed to ensure that SSN programs are effective, but they should work with local governments, as appropriate. The present report provides an in-depth assessment of ways in which Peru's social safety net could be made better targeted and more effective. This complements the 2005 Poverty Assessment which estimated the potential impact on poverty levels of a broad set of policies, including a more efficient social safety net, but also including adequate taxation policies and well-targeted, effective programs in health, education, basic infrastructure and utility services.