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CIS: New World Bank Report Shows Mixed Progress On Poverty

  • Robert McMahon

There are still 60 million people below the poverty level, according to the World Bank The World Bank's biggest report in five years on Eastern Europe and the former Soviet Union finds a sharp drop in poverty in most of the region. The report says growth in states such as Russia, Kazakhstan, and Ukraine helped lift some 40 million people out of poverty from 1998 to 2003. But the World Bank says millions in the Commonwealth of Independent States (CIS) still subsist on only $2 per day and that high-growth countries are not doing enough to improve health and other services.

Washington, 12 October 2005 (RFE/RL) -- For more than six years, the economies of former Soviet states have grown at a pace higher than the world average.

A new World Bank report released today says this growth has lifted tens of millions of people out of poverty. The report finds that from 1998, the year of Russia's financial crisis, to 2003, the region experienced a revival.

Russia's economic surge, particularly through exports in commodities like oil, powered growth in most of the CIS.

Mamta Murthi, an economist for the World Bank and one of the report's authors, said the link between growth and poverty was expected. But she said it was a surprise to find that inequality -- as measured by household consumption of goods and services -- declined in the CIS from 1998 to 2003.

"There has been a return of growth, there has been this rebound in the CIS, and this has had an enormous impact on the well-being of people in the region," Murthi said. "And contrary to fears that this growth was entirely going to be captured by a narrow section of the population, we do find that, broadly speaking, everyone has benefited and poverty has declined."

But the report's overall findings are mixed. Regionwide, there are still 60 million people below the poverty level. Another 150 million are considered "economically vulnerable." Poverty remains high in a subregion grouping the three Caucasus countries and Uzbekistan, Tajikistan, Kyrgyzstan, Turkmenistan, and Moldova.

Inequalities persist in the subregion in access to good schooling, health care, reliable water, and electricity.

Throughout the CIS, Murthi told RFE/RL, the report found problems with affordable access to quality services.

"People may have more money in their pockets, but it doesn't mean they have access to public services of the right quality," Murthi said. "There remain large spatial inequalities. It's the capital cities and other centers of tourism that have benefited. The rural areas and the smaller cities are lagging behind."

Murthi cited a fast-growing middle-income country, Kazakhstan, as an example of the contrast between urban and rural prosperity.

Kazakhstan's poverty rate decreased from about 30 percent to about 20 percent from 2001 to 2003. Murthi said that in the country's old and new capitals -- Almaty and Astana -- the rate fell to nearly zero by 2003. But in rural areas of Kazakhstan, she said, about 30 percent of the population still subsists on the poverty level of two dollars per day.

"Despite all that's happened -- Kazakhstan, if you like, is a success story [with] growth, poverty reduction, reductions in inequality -- you have this huge disparity between the, let me call them twin capitals, though Astana is the official capital, you have these huge disparities between the twin capitals and the rest of the country," Murthi said.

The World Bank says a chief problem for rural areas in many of the CIS countries, especially in Central Asia, is that small farmers do not have access to credit, trade, and services.

Tajikistan is the region's poorest country, with nearly 70 percent of the population living below the poverty level. The little wealth generated there in recent years has not been equally distributed. The World Bank says, for example, that the reliability of water in Tajikistan has declined for all but the top one-fifth of the population.

Murthi said only a few countries surveyed water services, but the results were negative.

"We actually document cases where the number of hours of uninterrupted supplies of water has actually gone down," Murthi said. "Tajikistan is a country that comes to mind. Armenia is another one where uninterrupted water supply has not improved, the number of hours has not improved over this period."

A separate World Bank study in September found there is declining water quality, even in areas with high access. The water problem is impeding efforts at reducing rates of maternal and child mortality as set forth in the UN's Millennium Development Goals.

The World Bank projects there will still be 40 million people living in poverty in the former Soviet Union and Eastern Europe by 2007.

In addition to improving basic services, the report recommends pursuing enterprise reforms, boosting rural growth, and promoting opportunity in lagging regions. It says countries still enjoying high rates of growth must do more to provide social protection for the working poor and children.
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