Nepal presents a critical case where well-designed social safety nets can provide the much needed support to vulnerable segments of the population, in order to avoid entrampment in the spiral of poverty or social exclusion. In its 2005 report (ILO, 2005), the ILO identified social protection as one of the three key elements "of a secure social safety net for those affected by crisis". Social protection through basic pensions, basic health care and basic education are key elements in alleviating and preventing poverty, and can help mitigate the adverse effects of chronic poverty (ILO 2001; 2002). Following an analysis of the development of social security and its implications for poverty reduction in OECD countries, a recent ILO report (Townsend, 2007) notes that "... social security schemes involving entire populations and categories of the population like young children and disabled people in developing countries, i.e. social insurance and tax-financed "universal" group schemes, deserve priority, even if for reasons of limited resources they have to be phased in by stages...".
Well designed social security provisions are a necessary component of measures put in place to attain the targets of the Millennium Development Goals, set by the international community. Parly as a result of the conflict in Nepal, the country's progress towards meeting the Millennium Development Goals has fallen well behind the targets. The UNDP in its 2006 report on the assessment of needs for Nepal, indicated that in order to achieve the MDG targets in Nepal, more than US$ 6.3 billion is needed for reducing hunger, improving education and developing infrastructure (UNDP, 2006). A well-designed social security system has a central role to play in overcoming the plight of poverty and social exclusion in which so many of the country's people remain trapped.
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