POVERTY: UN Asia Pacific Chief: Corruption Feeding Poverty, Halting Social Development

Ron Corben : Bangkok May 22, 2011
 Photo: AFP
The UN's executive secretary for the Asia and Pacific Economic and Social Commission, Noeleen Heyzer (file photo)

A senior United Nations official says corruption across Asia is undermining efforts to fight poverty and reduce income disparities. In a wide ranging interview with VOA, Dr. Noeleen Heyzer, the UN’s executive secretary for the Asia and Pacific Economic and Social Commission, said countries must invest in what she called social protection to ensure economic growth in Asia.
“You know the issue is governance. Because at the end of the day you need economic governance. You need better political governance because to be able to have systems that invest in the social foundations of your communities in order that people can have a better life. And obviously any forms of corruption acts against that.”
The Asian Development Bank recently called for improvements in government accountability as “critical” in Asia to maintain social and political stability. It said rising corruption was evident in a “deterioration in the quality and credibility of national political and economic institutions.”
A World Bank Institute report warned of a retreat in accountability and political stability in Asia between 2008 and 2009. In India, for example, the World Bank found only 40 percent of government funds allocated for poverty-related programs actually reached the poor. The remainder, the Bank said, was lost because of bad administration and corruption.
Dr. Heyzer warned that despite recent regional economic gains, widening income disparities needed to be addressed by governments through improved social protection programs.
“What we have seen is that in Asia you have high economic growth but you also have growing inequalities and disparities. And the only way to deal with that is to ensure inclusive growth, to invest in social protection in making sure that for the for the first time this continent can rethink itself and reinvest in itself in terms of taking on the social perspective and dimensions.”
Economic analysts say the Asia Pacific region is an important driver of global growth. But Dr. Heyzer says Asia still faces several challenges to ensure the gains are widely shared.
“Closing the disparity gaps would be critical. How do you sustain growth, but at the same time how do you ensure that this growth is inclusive. We have economic recovery but this recovery is still fragile. There’s going to be major concerns about inflation - there is still a major concern about asset bubbles, capital inflows, and it’s critical to sustain that economic growth.”
In a recently released economic survey UNESCAP forecast Asia Pacific developing economies to grow by more than seven percent for 2011, with China and India expanding at close to nine percent. But the report said inflation remains a concern, due to rising food and energy prices, with the poor especially vulnerable.
http://www.voanews.com/english/news/economy-and-business/UN-Asia-Pacific-Chief-Corruption-Feeding-Poverty-Halting-Social-Development--122411694.html

POVERTY: World Bank Sees Poverty Down, Inflation as Biggest Risk

31 March 2011: Irina Filatova
The government's social spending measures appeared to bear fruit last year, resulting in declining poverty rates, although Russians are likely to face additional inflationary pressure ahead of the 2012 presidential elections, the World Bank said Wednesday.
The government should focus on controlling inflation in the short term, as the growth of budget expenditures is possible due to upcoming elections and preparations for the Sochi Olympics in 2014, the bank warned in a report.
"The upside risks for inflation, associated with additional fiscal spending during the election cycle, will remain in 2011 and 2012," the report said.
According to the report, the government's economic policy should be aimed at "a more ambitious fiscal adjustment and a long-term non-oil fiscal deficit of about 4.3 percent of gross domestic product," as the budget remains vulnerable to a sudden decline in oil prices.
Zeljko Bogetic, the World Bank's leading economist for Russia, said efficient budget policy was crucial, since the Russian economy largely depended on oil prices.
The country is facing a risk of returning to "the oil curse" with high oil prices resulting in "unjustified government expenditures, especially in the pre-election time," he told reporters at the bank's Moscow office.
The government should reduce the budget's vulnerability to new spending by cutting the non-oil fiscal deficit, which currently stands at a very high level of 12.7 percent of GDP, Bogetic said, adding that the government's current plan to reduce the budget deficit was "reasonable."
The World Bank supports the Finance Ministry's recent initiative to put additional revenues coming from the oil and gas sector in reserve as a measure to lower inflation rates, said World Bank economist Sergei Ulatov.
"We support this decision because it's aimed to fulfill two tasks — first to lower inflation rates and second not to cause additional expenditures," Ulatov said.
Finance Minister Alexei Kudrin said earlier this month that part of the additional revenue coming from the oil and gas taxes and duties would be used to lower the budget deficit and increase the reserve fund, which now stands at just 2 percent of GDP.
The reserve fund decreased almost 50 percent over the last year, having reached $26 billion by March 1, compared with $59 billion in March 2010, according to the Finance Ministry's web site.
Inflation stood at 8.8 percent in 2010, while the Central Bank expects that it will drop to 6 percent to 7 percent this year.
"Inflation is Russia's main problem in the short term," Bogetic said.
He said inflation was not only a macroeconomic problem but a social one as well, because it resulted in serious pressure on real incomes for the middle and lower class.
According to the report, food prices jumped by 17.5 percent in June to February largely because of last summer's severe drought.
Low-income households were most affected by the surge in food prices, which caused a 5 percent drop in consumption, the report said.
However, the government's social support measures, which included increasing pensions and wages in the public sector as well as unemployment benefits, resulted in the percentage of the population living below the poverty line falling from 13.2 in 2009 to 12.7 last year, it said.
An impoverished person, according to the government figure, is anyone earning less than 5,902 rubles ($208) per month.
Prime Minister Vladimir Putin said late last year that the government had no intention to trim social spending.
The government will increase pensions by 10.3 percent starting Friday, with a total of 20 billion rubles ($700 million) being set aside in the Pension Fund's budget.
The World Bank expects a further decline of the poverty rate, which is likely to reach 11.2 percent this year and 10 percent in 2012 due to the positive economic growth rates and falling unemployment.
The bank lowered its forecast of economic growth rates in 2011 to 4.4 percent, compared with last year's prediction of 4.5 percent.
Bogetic said cutting inefficient expenditures was one possible way to reduce budget spending and prevent inflation growth. Additional funds, which will appear as a result of the move, could be used to finance "priority infrastructure projects," he said.
Upgrading transport and road infrastructure will require significant budget spending, while the funds currently appropriated for these purposes are not sufficient, the World Bank said.
The government plans to spend a total of 644 billion rubles on upgrading transportation infrastructure this year, with 453 billion rubles being spent on road maintenance.
"According to estimates, the proposed funding levels for the road sector by 2013 will narrow –– but not eliminate –– the funding gap for maintenance of the federal highway system," the World Bank reported.
According to the bank, poor infrastructure is a key factor constraining economic competitiveness.
Improving the country's investment climate is one of the crucial tasks for the government for the coming years, Bogetic said.
"It's not a problem of one sector. It requires the government's highest attention and the attention of state agencies in charge of developing small and medium business, as well as the issues of investment climate in general," he said.
http://www.themoscowtimes.com/business/article/world-bank-sees-poverty-down-inflation-as-biggest-risk/434103.html

POVRERTY: Redefining Inflation With Poverty

Douglas A. McIntyre: February 16, 2011

Inflation is often defined as the overall increase in the price of goods and services. That oversimplifies how inflation works and does not include the drop in currency values or purchasing power. As agricultural commodities and metals prices soar, so do the costs of meeting the needs of most consumers and businesses.



Economists have become increasingly worried about the record high prices of some crops and mined metals because it will stifle consumer purchases.
The inflation problem is much broader outside the US and other developed nations. Inflation in Third World nations and part of the developing world would better be defined by the movement of millions of people into poverty. A World Bank report which received a great deal of press coverage said that “Rising food prices have driven an estimated 44 million people into poverty in developing countries since last June as food costs continue to rise to near 2008 levels.” Tens of millions of people worldwide spend more than 50% of their income on food. That number gets closer to 100% for increasing numbers of people every day.
The World Bank report is more telling when it is examined country-by-country. Nations with the poorest populations are often those which face the more sharp rise in food prices. Wheat rose 49% in Bangladesh from June to December 2010. Rice rose 46% in Vietnam. Bean prices were up 38% in Uganda.
The horrible cost of food price inflation takes a toll in increased poverty and starvation. Inflation needs to be recast as a plunge into insolvency for millions of people–a sort of food-borne bankruptcy. The economic ripples spread out with the humanitarian one.
The effects of the increase in food prices may last for a year or more. Crop production is sharply down in parts of the US, China and Russia. Global weather patterns have caused the problem to grow. Nations like China have releases food stores, but with a hundred year drought its wheat supplies will soon be exhausted.
Each person driven into poverty by the cost of food becomes a person who is no longer a consumer. That might seem to be a crass way to define a trend which may extend to nearly one billion people. Third world national economies weaken as GDP and tax bases fall and the need to fund aid increases.
Inflation may undermine consumer spending in the developed world. However, among many of the Third World nations, inflation and poverty are at the bedrock of an impossible economic recovery.
http://247wallst.com/2011/02/16/redefining-inflation-with-poverty/

POVERTY: VIETNAM: Struggling to cope with rising prices

1 March 2011 (IRIN)


Photo: David Gough/IRIN: Eight out of 10 people in Vietnam live in rural areas,which like the rest of the nation, is hit with record price increases

HO CHI MINH CITY,  - Vietnam's inflation rate is among Southeast Asia's highest and its population is struggling to keep up with sharp increases in food, fuel and electricity prices.
On 1 March the government increased electricity prices by a record 15 percent to an average 1,242 dong (US 6 cents) per kilowatt per hour. The week before, petrol prices were raised by 18 percent to 19,300 dong (93 cents) per litre.
In Vietnam, inflation has increased every month since August 2010, reaching 12.2 percent in January.
"Things are getting really uncertain," said Nguyen Bich Hanh, 25, a public school teacher who lives on the outskirts of the capital, Ho Chi Minh City. "We are struggling to pay for electricity, and food [prices are] getting extreme."
In the past two months, Nguyen said the price of high-quality rice, for example, had increased by almost one-third to 22,000 dong ($1.13) per kilogramme.
She earns $150 a month and spends most of it on food and transportation for her family of five.
The World Bank ranks Vietnam as a lower middle-income country. Still, worries about poverty run deep in a country where 80 percent of the population lives in rural areas and most of the workforce is agricultural.
Half the population lives on less than $2 a day, and many could slide into poverty because of economic shocks and natural disasters, according to AusAID, the Australian government's aid agency.
Nguyen saves money by turning off the electricity at home at all times, and increasingly, by skipping meals.
"Fewer kids are coming to school because they need to help their families," she said.

Coping
Sudden price fluctuations are forcing Vietnam's poorest to find quick and creative ways of coping, said Ben Kerkvliet, a Vietnam scholar at the Canberra-based Australian National University.
"Many rural households in Vietnam have small gardens, small fish ponds or other aqua-raising opportunities, chickens or ducks... that help to feed their families," he told IRIN. "In hard times, these sources of food become even more important.
"Youngsters in the household may go to school without school supplies. They may have to quit school altogether," he added. So far, Vietnam has performed well in enrolling students in primary school and keeping them there.
In 2009, net enrolment in primary school was 97 percent and 88.5 percent of children who enter primary school complete at least five years, according to the UN office in Vietnam.
But should inflation increase sharply beyond current levels, said Kerkvliet, general stability could slide. "Should shortages of key commodities like rice and wheat become extreme, villagers are likely to protest in various parts of the country," he said. "At present levels of inflation, the likely political change will be policies aimed at addressing the problems."
This year, the government hopes to limit inflation to 7 percent, compared with 11.75 percent last year.
For Nguyen, poverty is more pressing than numbers on paper. "They say our country is becoming richer," she said, "but this does not matter if regular people cannot afford anything."
http://www.irinnews.org/report.aspx?ReportID=92058