During the fourth Monetary Policy Review of the Central Bank of Sri Lanka (CBSL) held this week, CBSL Governor Dr. Nandalal Weerasinghe said that it was Sri Lanka’s responsibility to alleviate the burden of the poor, as this had not been among the aims of the International Monetary Fund (IMF), which the country has collaborated with in its bid for post-crisis economic stability. At present, the percentage of persons living in poverty in Sri Lanka has doubled after the economic crisis, standing at 22.7%.  

Pre-crisis figures from 2019 show that poverty stood at 11.3%; this figure reached 27.1% in 2023, the highest recorded in the last decade. The World Bank’s biannual review of Sri Lanka released in April 2024 stated that poverty in the country was anticipated to remain above 22% until 2026. 

The reasons behind the relatively high figures for a nation that had made significant gains in alleviating poverty in the past few decades were pegged to inadequate debt restructuring, financial sector vulnerabilities, and the enduring impact of the crisis, which is expected to remain until 2026.  

Pros and cons of ‘Aswesuma’

Within Sri Lanka’s social safety net, the ‘Aswesuma’ scheme, launched by the Government in December 2022, was meant to replace its predecessor ‘Samurdhi.’ Its introduction was tied to a key condition in Sri Lanka’s loan agreement with the IMF, which required the Government to implement structural reforms, including the establishment of a more effective social safety net.  

In contrast to ‘Samurdhi,’ ‘Aswesuma’ aims to provide targeted financial assistance to vulnerable and low-income groups, with a focus on reducing poverty, improving social welfare, and bolstering household resilience amid the country’s ongoing economic challenges. By prioritising transparency and efficiency, the programme, in theory, seeks to address the limitations of previous welfare systems while supporting those most affected by economic instability.  

For the 2025 fiscal year, the Government has allocated Rs. 232.5 billion for the ‘Aswesuma’ welfare programme. This is a significant increase compared to previous years, where allocations were in the range of Rs. 60-65 billion. While unfair exclusion from the programme has been raised by independent researchers and think tanks in the recent past, the lack of mechanisms to ensure that individuals are credibly alleviated and able to exit the programme has long been unanswered.  

In its effort to seek financial prudence and amidst growing pains of limiting public spending, Sri Lanka has no strategy in place that ensures that once individuals join the cash transfer programme, they are eventually enabled to exit the scheme.  

Role of the Welfare Benefits Board

Speaking to The Sunday Morning Business, Finance Ministry Media Secretary Vajira Basnayake conceded that the scheme had room for improvement, starting with the bureaucratic nature of the Welfare Benefits Board (WBB). 

“The ‘Aswesuma’ scheme was entirely drafted and devised by the previous Government. We had many issues dealing with the WBB members. However, we have made some changes,” Basnayake said, although not specifying what changes the institution had undergone. 

She added that there was technically no such exit strategy for the ‘Aswesuma’ scheme at the moment, and if there was, it was still in the discussion stages. “The Finance Ministry does not, however, have sufficient information to share with the public of any such plans to be implemented or exit strategies to be explored at the time being,” she said.

Speaking to The Sunday Morning Business, a source from the WBB stated that at present, operational decisions, such as the need for exit strategies, lacked adequate study within the board.  

“On our end, as officers, however, we see the need for it and are making an effort in that direction,” the source said. “Within this scheme, there is only the exit brought on by, say, a recipient having forged information or having been found guilty of corruption, or, in rare circumstances, caused by the refusal on part of the recipient to receive benefits. The last is what is called a ‘natural exit,’ wherein the recipient dies.”

However, more optimistically, the source stated that there had been documented discussions between the WBB and the Rural Development Ministry, with the engagement of two multilateral organisations that had approached the institutions to formulate what would be called an ‘empowered exit.’ 

“Internally, there has been progress on strategising an empowered exit. Two multilateral organisations have identified this gap in the scheme and are working with the WBB and Rural Development Ministry to draft and assess the possibility of providing what we call an empowered exit,” she said.  

She added that ‘Aswesuma,’ in its current state, was nothing beyond a cash transfer programme, albeit one that had a higher exclusionary rate than its predecessor. “Beyond the vetting process, which does have exclusion errors, there is no means by which people are assessed and assisted to alleviate their circumstances.” 

She further added that earlier on in the year, the ‘transient group’ category of recipients had been abruptly dropped from the programme without adequate study.  

“This was a group of 400,000 persons who received a Rs. 6,000 cash transfer on a monthly basis. There had been no study or reasoning into why the subset was dropped. Due to exclusion errors, it is likely that persons considered severely poor were also in this category of beneficiaries who were dropped, without much reasoning,” she said.  

The need for evaluation and an exit strategy

Speaking to The Sunday Morning Business, University of Colombo (UOC) Department of Economics Lecturer Umesh Moramudali noted that the ability to implement a feasible exit strategy, or a justified gradual ejection from the scheme, began with assessing the efficacy of the scheme in alleviating the circumstances of beneficiaries over time.  

“They are saying this will only be given for a certain period, and thereafter, there will be an evaluation, based on which they will decide whether people continue to receive ‘Aswesuma’ or not. How that evaluation is going to be done or whether there will be another survey is not quite clear,” said Moramudali, who has studied the scheme from its commencement.  

He elaborated: “The first step is to make it clear how the evaluation will be conducted once this particular period is completed. Because for extremely vulnerable people, there is a timeline. What action will they take after that? Are they going to conduct another survey, or will they proceed without one, simply based on requests?”  

Moramudali added that individuals should be assessed based on dynamic criteria. “The second phase should be to see whether there is potentially a way to revise these criteria, in terms of checking income, wealth, etc., and how ‘Aswesuma’ has impacted their livelihoods in the past few years.”  

He stated that progress should be evaluated, as the scheme was meant to sustain, rather than specifically empower its beneficiaries. “The key is to identify the progress, whether ‘Aswesuma’ has helped them. The idea of ‘Aswesuma’ is not to ask people to start businesses or try to earn money; it is meant for persons who are unable to survive. 

“Many are against the idea of handouts, but this is given to people who specifically find it hard to earn money due to the particular set of circumstances they are in. This is giving them a sort of stipend until they get back on their feet.”  

Moramudali added that in the category of individuals who were dependent on the State, specifically on the ‘Aswesuma’ programme, would certainly be persons who were unable to extricate themselves from their dependence on the scheme. 

“This is not something you can expect someone over 65 years old to do. There will be certain people whose exit might not happen until death. However, if there is a young person or individual who has the potential to work within the labour force but is receiving ‘Aswesuma’ benefits, perhaps due to a lack of jobs or inadequate education, the Government should take care of them for the time being,” he said.  

Moramudali extended his premise for questioning the efficacy of the scheme to assessing the possible causation factors that may hinder persons from seeking stable employment by utilising the WBB’s database of recipients.  

“The job of the WBB, in coordination with ‘Samurdhi’ (because the former is strictly responsible for transferring cash), is to use the WBB database to assess why they are poor. Is it because they lack assets, adequate education for jobs, or other reasons? Then, a strategy should be developed to elevate them, which should be done separately. 

“Let’s say we take a 40-year-old recipient who doesn’t have a job and lacks the qualifications to get one. One way is to equip that particular person with skills so they can secure employment. Secondly, in the longer term, you could link them, creating a pool of people with their talents at the community level, including some informal mechanisms. You can explore how to connect these people to jobs,” Moramudali said, offering alternatives beyond that of the scheme.  

He further posited that persons dependent on informal daily wage-based employment, who were more than likely to file for the stipend, could be linked to more formal channels of work through Government assistance and cooperative community mechanisms. 

“That is not something the Government can do alone; it has to be a cooperative effort with the community. There should be a community programme mechanism.”  

A holistic approach needed

Speaking on the more recent launch of ‘Praja Shakthi,’ the National People’s Power Government’s multidimensional poverty alleviation programme, Moramudali noted that none of the existing programmes meant for addressing poverty were crucially interlinked.  

“Currently, ‘Aswesuma,’ ‘Samurdhi,’ and now the ‘Praja Shakthi’ programme are working in silos. ‘Aswesuma’ has an incredible database of people who have requested aid, which can be used to identify why people are poor and what kind of support they need. For instance, is it an economic problem? Is it a skills or education problem?”  

Moramudali explained that identifying these groups of persons and building mechanisms for them to seek stable employment was key to ensuring that more people moved out of permanent dependency on the ‘Aswesuma’ scheme.  

“Provide skills to those who lack them and connect those who are unemployed, with or without skills, to jobs. That is where all these programmes – ‘Praja Shakthi,’ ‘Samurdhi,’ and ‘Aswesuma’ – need to be interlinked. They must work together to address this as a holistic issue.”  

Interestingly, Moramudali concluded that the WBB, with its existing issues of exclusion and limited study into the persons enlisted, should focus on making use of its database, and that the task of solving long-term dependency on welfare was one that needed to bring Government agencies together.  

“The Welfare Benefits Board should not be burdened with other tasks; it should just manage cash transfers. The WBB’s database is not being used sufficiently at all,” he said.