Countercyclical safety nets for the poor and vulnerable

Relatively little is known about how government safety net programs insure against low consumption and stabilize asset bases, compared to what is known about their role in transferring income. The insurance function requires a flexible budget that can be scaled up rapidly to meet unanticipated circumstances. Safety nets serving an insurance function also differ from other transfer programs in their targeting; they need to determine transitory need rather than more chronic correlates of poverty. Moreover, insurance safety nets need a more flexible implementation strategy than do more permanent programs. This paper reviews these issues from the perspective of low income countries.