Safety Nets for an Economic Crisis Situation

In times of crisis governments are galvanized to provide safety nets, even in countries that have been unwilling to fund them in stable times. Without a base to buUd on, the response to a crisis will be constrained, although crisis responses are often the start of more permanent safety nets. Even with a base to buUd on in a crisis, the speed and scale of action needed to address the crisis may entail temporary compromises in relation to the usual standards for targeting, incentive compatibility, and accountability. 

FOR PROTECTION AND PROMORON THE DESIGN AND IMPLEMENTAWN OF EFFECTIVE SAFETY NETS 

The primary objectives of safety nets in times of crisis are to protect incomes and avoid irreversible losses of physical assets and human capital and to help maintain political consensus around the policies needed to resolve the crisis. Permanent and appropriately financed programs can also act as automatic fiscal stabilizers, although programs with permanency, appropriate finance, and guaranteed countercyclical finance are rare (see chapter 3, section 3). 

Public works programs are less applicable where labor adjustments that occur as a result of a shock are mostly through a widespread reduction in wages rather than through 

In addition to public works programs, crisis responses usually include as much protection as possible for the budgets for basic health and education services and sometimes include new scholarship or fee waiver programs to help avoid irreversible losses of human capital. Colombia s Familias en Accion CCT program, Indonesia s JPS Scholarship and Grant Program, and Zimbabwe s Basic Education Assistance Module of school fee waivers all started under such circumstances. 

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