Report Shows Significant Decline In Poverty

[Siamanto]

ARMENIA: REPORT SHOWS SIGNIFICANT DECLINE IN POVERTY

Haroutiun Khachatrian: 11/09/04

 

Eurasianet Organization, USA

Nov 10 2004

 

A recent economic survey in Armenia, showing a significant decline in

the number of citizens living in poverty, has placed President Robert

Kocharian's administration in a somewhat awkward position. While

Kocharian has been eager to show Armenians that living standards

are improving, the report's findings could complicate the Armenian

government's efforts to secure international aid for poverty-reduction

programs.

 

The annual survey of household incomes by the National Statistical

Service, a non-governmental agency, contained a full range of startling

statistics. Among the most surprising: the percentage of Armenians

living below the poverty line fell from 50 percent in 2002 to 42.9

percent in 2003. Similarly, the number of poorest Armenians - those

who earn less than 7,742 drams (about $15) per month - also took a

surprising plunge -- from 13.1 percent of the population in 2002 to

7.4 percent in 2003. At the same time, the survey indicated that the

country's income gap between rich and poor narrowed slightly.

 

The statistics reveals that the poverty reduction rate in Armenia

far exceeds the government's projections as outlined in its Poverty

Reduction Strategic Paper (PRSP) released earlier this year. In the

PRSP, for example, officials estimated that that it would take until

2012 before the so-called "very poor" could be reduced to less than 8

percent of the population. The NSS figures show that this benchmark has

been surpassed a full eight years ahead of the government's schedule.

 

Given the NSS findings, questions are already being raised about the

accuracy and potential effectiveness of the government's anti-poverty

blueprint. While officials have been happy to tout the reduction

in poverty, already one government minister has disputed the NSS

findings. At a recent news conference, Vardan Khachatrian, the minister

of finance and economy, described the results as difficult to trust

and too optimistic.

 

Some economic experts share Khachatrian's doubts. "I cannot see the

reasons which could bring about such a drastic change in the percentage

of the population made up by the very poor," said Ruben Yeganian, a

researcher at Yerevan's Institute of Economic Problems. The decrease

was particularly improbable for 2003, when Armenia's inflation rate

soared in response to an increase in foreign grain prices, Yeganian

asserted. That year, bread prices increased by 31 percent between

January and December, causing an overall 8.6 percent increase in the

consumer price index, compared with a 2-percent rise the previous year.

 

A recent report by the International Crisis Group (ICG) echoes

Yeganian's assessment. The October 18 study, titled "Armenia:

Instability Ahead," states that while the market reforms of the

1990s may mean Armenia is now enjoying a relative boom, relatively

few Armenians have seen a vast improvement in living standards. "The

benefits of economic recovery are not equally shared," the report

found. "There is little sign of poverty decreasing." [For additional

information see the Eurasia Insight archive].

 

Contradicting the NSS, the ICG report cited statistics that show 55

percent of the population lives in poverty, with wealth concentrated in

Yerevan and in "circles close to the government." Meanwhile, the exodus

of educated, well-trained workers -- one of the main obstacles to an

Armenian economic comeback -- continues. Favored labor markets include

Russia, Central Europe, Ukraine and Turkey, where potential salaries

are higher than the $78 average monthly salary to be had in Armenia.

 

The poverty issue has figured prominently in the ongoing power struggle

between Kocharian and opposition political parties. [For background

see the Eurasia Insight archive]. In an attempt to outflank his

critics, Kocharian unveiled a 12-year plan for fighting poverty in

June. Yeganian speculated that the government may have cast doubt

on the NSS findings in order to prevent a decrease in foreign aid

programs. An additional factor feeding official concerns, Yeganian

suggested, is the decrease in value of the US dollar against the

Armenian dram over the last year. As a result, the incomes of

Armenians, when denominated in dollars, appear to have increased.

 

The Armenian government counts heavily on international aid to

promote economic stabilization efforts, including anti-poverty

programs. Armenia hopes to receive $100 million for various economic

development schemes in 2004 from the US Millennium Challenge Account

program, aid monies that are contingent the country's record for

democratic reform and human rights. Also in support of Kocharian's

agenda, the World Bank has pledged to deliver $250 million by November

2004 for work on rural schools, infrastructure and irrigation systems.

 

Some representatives of the NSS themselves have admitted to being

caught off guard by the survey's results. Hovik Hohannisian, head of

Food Security Statistics, raised questions about the criteria used

to determine who is "very poor," saying that the food basket used to

determine purchasing power was actually more like a "bread basket."

 

Meanwhile, one of the country's main creditors, the World Bank,

said it saw no reason to doubt the NSS data, the Bank's Yerevan

spokesperson, Vigen Sargsian, told EurasiaNet. Aside from the World

Bank, the NSS's data is routinely cited by international organizations,

including the International Monetary Fund. The NSS also receives

advice from representatives of the European Union and the US Agency

for International Development.

 

 

Editor's Note: Haroutiun Khachatrian is a Yerevan-based writer

specializing in economic and political affairs.

 

http://groong.usc.edu/news/msg96719.html