HOW IMPORTANT HAVE POVERTY-TARGETING MEASURES BEEN IN MONETARY TERMS?

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This question is important not just in assessing the overall impact of such

expenditures on the poor, but also in terms of the potential trade-off between

poverty alleviation and economic growth. In most countries, however, the

scale of public poverty-focused expenditures has not been large enough to

raise the issue of a potential or actual trade-off. India is the country with

the longest record of poverty-focused interventions and of our cases the

one where such expenditures appear to have taken the highest share of

the budget of central and state or local governments. Estimation of total

expenditure on poverty-targeted programs in India is diffi cult because of

the variety of schemes and the range of fi nancing whether at the central,

state or district level. Excluding fertilizer subsidies, which are not explicitly

targeted at poor farmers, Srivastava (Chapter 2 in this volume) estimates

expenditure on the largest targeted programs to be about Rs 411 billion in

2001–02 (which is about 11 per cent of the central government expenditure

and 2 per cent of GDP).6 If fertilizer subsidies are treated as povertytargeted

interventions the proportions rise to 15 per cent and 3 per cent,

respectively. Another estimate of the time trend of this expenditure suggests

a rise of about 50 per cent in real terms over the 1990s with the main increase

between 1992–93 and 1993–94 (Shariff et al., 2002).

In PRC since the mid 1980s, when the responsibility for poverty reduction

initiatives was centralized in the Leading Group for Poverty Reduction of

the State Council, three types of funds are categorized in offi cial statistics

as central government poverty reduction funds – subsidized loans, workfare

programs and budgetary funds for poor counties. In 2002 these were RMB

29.1 billion showing a real average annual growth since 1986 of around

6 per cent. Most of this real increase came after 1996 and the real value

of these funds almost trebled between 1996 and 2002 (Wang, Chapter 4

in this volume, Table 4.2). There are also poverty expenditures by local

governments and government departments that might be as much as 25

per cent of the central government poverty expenditure (or around another

RMB 7.5 billion). In combination, this estimate of RMB 37 billion is 5 per

cent of the central government budget in 2002. Over the period 1986–2002

central government poverty expenditure has averaged 5 per cent of the

budget and no more than 0.2 per cent of GDP (Wang, Chapter 4 in this

volume, Table 4.2).

In Indonesia there have been a variety of targeted measures broadly

covering employment creation, food subsidies, and education and health

provision for the poor. The main program to pre-date the Financial Crisis

of the late 1990s was a poor village credit scheme introduced in 1994 (the

Inpres Desa Tertinggal or IDT), which had a budget of around $200 million

annually over 1994–96 (Perdana and Maxwell, Chapter 3 in this volume).

The IDT reached around 20 000 villages and was designed around a smallscale

revolving fund as credits were to be repaid and relent in the targeted

poor villages. Although it is diffi cult to obtain data on the costs of all

schemes in 1998–99 at their peak, approximate estimates suggest that they

might have taken around 9 per cent of the central government budget

(Perdana and Maxwell, Chapter 3 in this volume, Table 3.5).

In Thailand government poverty reduction programs have focused on

cash and in-kind (principally health facility) transfers to poor families,

and interest-free loans for either productive activities or education. Over

the 1990s these programs in total rose from 1.1 per cent (in 1993) to 4.6

per cent (in 2000) of central government expenditure (Warr and Sarntisart,

Chapter 5 in this volume, Table 5.8). However, the education loans program

is controversial and there is some dispute as to whether it is poverty-focused.

If it is excluded, the increase in poverty-related expenditure is from 1.1

per cent to 3.3 per cent of total central government expenditure. Since

2000 the government defi nition of poverty-focused expenditure has been

widened considerably with the result that now offi cially a signifi cantly higher

proportion of expenditures are seen as poverty programs. Under this wider

defi nition these activities took 10 per cent of central government expenditure

in 2000 rising to around 13 per cent in 2003 (Warr and Sarntisart, Chapter

5 in this volume, Table 5.11).

In the Philippines a range of anti-poverty programs have been applied with

different approaches and nomenclature used by different administrations.

Location targeting has been important in identifying where schemes

would function. Funds are provided for a range of services identifi ed by

communities themselves. There is also a rice subsidy program for farmers

and consumers implemented by the National Food Authority (NFA)

and a scheme to provide a limited range of free drugs to the poor. Even

including the food subsidy activities of the NFA total direct poverty-focused

expenditure was not more than 1.5 per cent of total central government

expenditure in the immediate pre-Crisis period in 1997–98 and no more

than 0.3 per cent of GDP. In the years since then, government social sector

expenditure on all categories has fallen as a proportion of GDP and real

government health and education expenditure has fallen in per capita terms,

although data on actual poverty targeted expenditure are not available

(Balisacan and Edillon, Chapter 6 in this volume).