Kyrgyz Republic Poverty and Inequality in 2009 Sarosh Sattar Europe and Central Asia Region

1. Kyrgyz Republic Poverty and Inequality in 2009 SaroshSattar Europe and Central Asia Region The World Bank October 6, 2011

2. Outline of presentation • Motivation • Objectives • Developments in poverty and inequality over 2006-2009 • Poverty profile: selected characteristics • Concluding remarks

3. Motivation • Opportunity to show the importance of micro data to really understand what is happening to the population in the Kyrgyz Republic • Economic growth does not benefit all groups equally therefore it is important to look at disaggregated data

4. Objectives • To monitor development’s in the population’s welfare – especially those who are the most vulnerable • A descriptive report which complements the National Statistical Committee’s publication on poverty indictors • Stimulate interest by raising more questions than are answered

5. Dynamics of Poverty & Inequality, 2006 - 2009

6. Economic ContextLarge movements in macroeconomic aggregates

7. Poverty was responsive to economic growth

8. Large decrease in poverty rates

9. Growth improved the livelihoods of lower income groups more….

10. Mean consumption in 2006 & 2009

11. By 2009 share of salaries fell and pensions rose compared to the previous year

12. Inequality fell as measured by the Gini coefficient

13. Also, the share of consumption increase for the bottom 80% of the population

14. Macro and micro points • What we know…. • Before 2008 economic growth and remittances went hand in hand with falling poverty rates • In 2009 there were dramatic changes in growth, remittances, and public expenditures and poverty remained level • What we don’t know • Why the bottom 40 percent of the population benefited the most in 2006-2009. • What economic developments occurred that were “pro-poor” and are they a result of government policies?

15. A puzzle….. Why using household level data raises interesting questions for policy makers… and example

16. Rural and urban changes in mean consumption differed somewhat

17. Significant reduction in rural absolute poverty

18. But agriculture did poorly. So what led to poverty reduction in rural areas?

19. What could be happening…. • Farm income rose due to high food price increases but volume didn’t change • Non-farm income is rising • Remittances could have increased substantially • …. Or something else

20. Another puzzle….. Large differences across regions and large changes over just a few years….

21. Significant differences across mean consumption per capita by oblast

22. Large declines in poverty but also big differences

23. Poverty rates and mean consumption are strongly correlated Osh’s poverty rate is relatively high

24. Obvious questions • Why is there such high diversity among mean consumption levels and poverty rates across oblasts? • What factors could explain this? • Private sector development? • Education and productivity of labor? • Government spending? • Why are changes in poverty rates so dramatic but different across oblasts?

25. POVERTY PROFILE 2009

26. Geography matters for poverty

27. Larger households associated with higher risk of poverty

28. Higher poverty in households with more children

29. Distribution of poor by employment status

30. Poverty rates among household heads by employment status

31. Extreme poor more dependent on social assistance, but no significant difference between poor and nonpoor

32. Poverty distribution and rates in terms of education (HH head): negative relationship

33. Concluding Thoughts

34. Key Messages • Macroeconomic developments had a significant impact on the population’s living standards and the welfare of low income groups • Many interesting and unresolved issues of poverty and development • A large research agenda remains that could help policy makers pursue more thoughtful solutions