Chile Establishes a National System of Social Protection

Challenge

The Government of Chile was concerned that although the share of the population below the poverty line had declined during the 1990’s, the share in extreme poverty persisted.  Analytical work suggested that an important determinant of persistent extreme poverty was exclusion from a variety of networks that provided access to public and private risk mitigation instruments.

Although Chile’s social protection institutions were relatively strong and well run, several weaknesses in the social protection system were making it harder for the government to address exclusion.  Some of these weaknesses included: 

• The inefficient use of available information.
• Weakness of the targeting instrument..
• Gaps in monitoring and evaluation of social programs and policies. 
• Coordination failures at both the national and subnational levels.

 Solution

In addition to poverty assessments, an analysis of the social protection system, Chile: Household Risk Management and Social Protection, informed the reforms supported by this project and the accompanying adjustment operation.  The Social Protection Technical Assistance Loan ensured adequate financing and advice during the implementation of the policy reforms supported by the Social Protection Sector Adjustment Loan.

The project supported the progress made by Chile in moving from isolated interventions to a coherent, connected portfolio of programs, under a systems approach.  Over the life of the project, programs improved communications, shared to a greater extent common administrative subsystems, and worked together to respond to risks and to deliver resilience, equity and opportunity to the extremely poor population. 

Results

The following results were particularly important:

• Development of a legal framework for the inter-sectoral social protection system.
• Implementation of specific mechanisms and administrative arrangements to promote coordination including inter-institutional agreements, national budgeting procedures, an integrated social information system and registry of beneficiaries through which information is exchanged among nearly 40 public and private agencies.  Use of the targeting instrument was extended to other programs.
• Improvement of the take-up of transfers and programs. The results from the impact evaluations show in the short-run an improvement in the take-up of transfers and other programs, and improved education and health outcomes. The medium-term results of the program indicate positive effects on employment and income for some groups of families, as well as gains in living standards, including more stable housing conditions.  Results from the longer-term evaluation show benefits in particular for those who had been excluded from the social network as well as benefits from the progressive improvements on the supply side.

Bank Group Contribution

The original loan amount was $10.71 million.  Additional financing of $3.0 million was approved in late 2009.

Partners

Ministry of Finance (Budget Office), Ministry of Planning and Solidarity and Social Investment Fund (FOSIS)

Moving Forward

Most social programs include well-designed monitoring systems.  The Budget Division of the Ministry of Finance ensures that evaluation results are taken into account in spending decisions and organizes an annual schedule of program evaluations. 

Program monitoring indicators and evaluation results are accessible to the public.  Programs must also comply with the requirements of the Law of Transparency, in which the integrated social information system has played an important role.  Finally, the existence of social programs and transfers and the wide coverage of the targeting instrument enabled the government to respond quickly to the needs of the poor during the previous financial and food price crises, by providing lump sum transfers to specific target groups. 

Beneficiaries

The main beneficiaries were the nearly 600,000 families that participated in Chile Solidario.  One of the aims of Chile Solidario was to implement a new model of management of public institutions.  The project supported institutional changes and strengthening in several areas including better coordination and the integration of social assistance with social promotion.

 “This Government has taken into account the poor, humble people, those who are making an effort.  It is not so much the money…it is the support and orientation that they have provided us; in other words, the wish to move forward so that we can improve and become better people and have a better quality of life.    I feel capable.  I developed a personality that I did not have before. I didn’t talk.  I said to my husband, you talk, you go.  I didn’t handle any processes alone.  I was ashamed to speak because everyone looked at me when I spoke.  Now, I can talk with anyone.  Now try to keep me quiet.”

Rosa Chaguan, Town of Castro, Lakes Region