By Atom Markarian
The Armenian government approved on Friday a long-awaited socioeconomic program that pledges to drastically reduce widespread poverty in the next 12 years through the creation of new jobs, improved tax collection and greater public spending.
The Poverty Reduction Strategy, drawn by a large group of local and foreign experts, envisages that the share of Armenia’s population living in poverty will drop from the current 50 percent to 19 percent by 2015. According to it, the rate of “extreme poverty” will be brought down from 16 percent to 4 percent by that time.
The long-term strategy is in tune with the recently reshuffled government’s four-year plan of action which promises continued economic growth at a minimum rate of 6 percent and more efficient government policies. It predicts that the resulting benefits will trickle down to a much larger number of ordinary people in the form higher wages and new jobs, mainly in small private businesses.
The official poverty line, which is equivalent to the cost of a monthly “consumer basket,” is currently set at 12,600 drams ($21) per person. Those Armenians who live on less than 7,600 a month are considered extremely poor.
The authors of the plan anticipate that the modest social benefits currently paid to tens thousands of poor families will grow four-fold and reach the poverty threshold by 2015. They also envisage a similar increase in state pensions that now average a meager 6,000 drams.
According to Deputy Finance and Economy Minister Tigran Khachatrian, economic growth, which hit a record-high rate of 14.8 percent in the first half of this year, will be the driving force of poverty reduction. Khachatrian said the government will strive for a more even distribution of its benefits by collecting more taxes and channeling them into the public sector.
In particular, the state’s expenditures on education and health care will double in the next ten years, he said. Their share in Armenia’s Gross Domestic Product is extremely low at the moment.
The successful implementation of the anti-poverty plan will also require as much as $1.2 billion in additional external loans and grants, a target which will be difficult to meet now that Western donors are starting to cut back on their long-running assistance to Armenia. Khachatrian acknowledged this reality, saying: “We should increasingly rely on the growth of our own resources.”
The World Bank, the main donor institution, has been closely monitoring the difficult socioeconomic situation in Armenia with periodical household income surveys. The next such survey is due to be conducted later this year. Speaking to RFE/RL last week, the head of the bank’s Yerevan office, Roger Robinson, said he believes it will reveal a further drop in the country’s poverty rate.