Identifier
Created
Classification
Origin
07BOGOTA900
2007-02-07 23:28:00
UNCLASSIFIED
Embassy Bogota
Cable title:
URIBE COMMITTED TO POVERTY REDUCTION BUT SUCCESS
how-toVZCZCXYZ0000 RR RUEHWEB DE RUEHBO #0900/01 0382328 ZNR UUUUU ZZH R 072328Z FEB 07 FM AMEMBASSY BOGOTA TO RUEHC/SECSTATE WASHDC 2543 INFO RUEHBR/AMEMBASSY BRASILIA 7388 RUEHCV/AMEMBASSY CARACAS 8659 RUEHLP/AMEMBASSY LA PAZ FEB LIMA 4727 RUEHZP/AMEMBASSY PANAMA 9963 RUEHQT/AMEMBASSY QUITO 5382 RUEAIIA/CIA WASHDC
UNCLAS BOGOTA 000900
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: PTER PGOV PREL ECON CO PHUM PREF
SUBJECT: URIBE COMMITTED TO POVERTY REDUCTION BUT SUCCESS
WILL BE CHALLENGING
-------
Summary
-------
UNCLAS BOGOTA 000900
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: PTER PGOV PREL ECON CO PHUM PREF
SUBJECT: URIBE COMMITTED TO POVERTY REDUCTION BUT SUCCESS
WILL BE CHALLENGING
--------------
Summary
--------------
1. Colombia's poverty rate of 49 percent -- which reaches
almost 70 percent in rural areas -- exacerbates the
urban-rural divide and feeds social conflict. President
Uribe has boosted social spending, and improved economic
growth and targeted social programs have cut poverty rates.
Still, Uribe's public emphasis on security, coupled with the
magnitude of the poverty problem and a high level of
inequality, means he receives little public credit for his
anti-poverty efforts. The GOC's new "Strategy for
Strengthening Democracy and Social Development" links
increased social spending to the GOC's security policy and
the Free Trade Agreement with the U.S. Progress on all three
will be needed if the GOC is to achieve its goal of reducing
the poverty rate by at least ten percent by 2010. End Summary
--------------
Half the Country in Poverty
--------------
2. Approximately 22 million Colombians live under the
poverty line, with over 6.5 million in extreme poverty.
Poverty is defined as an individual living on less than USD
100 per month, and extreme poverty is USD 40 or less per
month. Between 1970 and 1995, sustained economic growth led
to the poverty rate dropping from 69 percent to 49 percent.
In 1996, the economy started to slow and poverty began to
rise. By 1999, Colombia was in the throes of its worst
recession in seventy years: GDP plummeted by 4.2 percent and
a decade's progress fighting poverty evaporated. By 2005,
steady economic growth and strong anti-poverty programs
brought the poverty rate back to 1995 levels. Colombia's
poverty rate is historically higher and more variable than
the regional average: between 1997 and 2005 Latin America
poverty gradually dropped from 43.5 percent to about 41
percent.
Poverty Rates in Colombia
Year Poverty Rate Extreme Poverty
1995 49.5 15.5
1996 50.9 17.2
1997 52.7 18.5
1998 55.3 20.8
1999 57.5 25.4
2000 55.0 19.0
2001 55.2 18.7
2002 57.0 20.7
2003 50.7 15.8
2004 52.7 17.4
2005 49.2 14.7
--------------
Income Distribution and the "Two Colombias"
--------------
3. Income distribution in Colombia is among the worst in the
world. Colombia's Gini index (which measures income
inequality) was 56.0 in 1995, rose to 60.0 in 1999 and
dropped back to 55.3 by 2005. It is now similar to that of
Brazil and Peru. Poverty is more acute in rural Colombia
than in urban areas. Over 68 percent of the approximately 12
million people living in rural areas in 2005 were
impoverished, versus 40 percent in the cities. The extreme
poverty rate is less than five per cent in Bogota, but it is
almost 50 percent in rural departments like Choco. The
number of rural poor is less now then it was in the late
1990's, but it stayed relatively flat between 2003-2005.
4. Pervasive rural poverty creates what Santiago Rojas,
director of the Foundation for Good Government, calls the
"Two Colombias." Former Minister of Economic Development
Mauricio Cardenas says Colombia's sharpest divisions, rural
vs. urban, poor vs. non-poor, and strong state presence vs.
weak state presence, largely coincide. Moreover, Colombia's
income inequality means economic growth trickles down slowly
to the poorest segment of the population. He estimates that
only half of recent poverty reduction reflects growth: the
other half comes from programs targeting the poor. Cardenas
said the key to bridging all three divides is to achieve
sufficient state capacity to deliver quality education and
health care to the rural poor. Cardenas and Rojas said
poverty, inequality and the rural-urban divide fuel
Colombia's social conflict and impede growth.
-------------- ---
Security Efforts Eclipse Social Welfare Programs
-------------- ---
5. The public sees President Uribe as weak on poverty.
Gallup polling in late 2006 showed Uribe's approval rating
exceeded 60 percent on all issues but one: his handling of
poverty where a majority disapproved of his policy. Andres
Davila, Director of Security Issues at the National Planning
Department, said he worries that the emphasis on security
creates the appearance that other issues do not matter. A
recent editorial in "El Tiempo," Bogota's leading daily
newspaper claimed Uribe's focus on security suggests he does
not care about poverty.
6. Despite the negative public view, Uribe has boosted
spending on social programs from just over 7 percent of GDP
in 2002 to almost 8 percent of GDP in 2006. Fabio Sanchez,
director of the Center for Economic Development, said most of
the increase was on education: during this period the number
of primary and secondary public school graduates went up by
almost 20 percent and the number of college graduates
increased by 30 percent. Similarly, the number of people
receiving health subsidies increased by over 70 percent,
rising from 10.7 million in 2002 to 18.6 million in 2006.
Increased spending on Internally Displaced People (IDPs) was
especially dramatic: while the government spent less than
USD 300 million on IDPs from 1995-2003, it spent over USD 800
million between 2003-2006. Throughout the period, social
spending substantially exceeded security expenditures.
7. "Families in Action," the GOC's flagship
poverty-reduction program, began in 2001 under President
Pastrana with about 80,000 families participating. The
number of families increased under Uribe to 500,000 families,
or 20 percent of all families in extreme poverty, by 2005.
The program gives conditional cash subsidies to the poor and
is widely credited with contributing to the sharp fall in
poverty and extreme poverty between 2002 and 2003. Subsidies
are discontinued if children do not attend school and or fail
to have regular health check-ups. The program has been a
notable success: school attendance and child height, weight,
and vaccination rates all increased, while child labor and
birth rate statistics decreased.
--------------
Spotlight on Poverty
--------------
8. In mid-November President Uribe announced a new
development plan that envisions reducing the poverty level to
39 percent in four years and to 15 percent by 2019. The plan
contemplates a billion dollars per year of new funding for
health, education and poverty reduction programs. Money has
not yet been budgeted for the plan which will be considered
in a special session of congress starting in the first week
of February. The plan is incorporated into the
administration's draft "Strategy for Strengthening Democracy
and Social Development" which focuses on social welfare
programs and poverty reduction. A major component of the
strategy is to strengthen the economy through structural
reforms and trade liberalization. The strategy links a
U.S.-Colombia Trade Promotion Agreement to GDP growth, job
creation and poverty reduction.
9. Families in Action will be the "axis of intervention" for
poverty reduction under the new development plan according to
Juan Pablo Franco of Accion Social (which manages the
Families in Action program). The number of families included
would rise to 1.5 million, or about five million persons by
2010. Local governments would hire approximately 30,000
social workers to help poor families meet specific
anti-poverty benchmarks. Benchmarks include, obtaining
government-issued identification documents which are key to
employment and access to social programs, going to school,
and establishing clear title to land.
--------------
Comment
--------------
10. Colombia's poverty rate has fallen over the past four
years due to strong GDP growth and effective social programs.
Unfortunately, the recent gains in poverty reduction and
income equality have only returned Colombia to its
pre-recession level of 1995. The GOC's plan to reduce
poverty to between 35-39 percent by 2010 will test historic
limits of Colombia's social development, and may not be
attainable given the current disparity in urban vs. rural
incomes. Social programs alone are unlikely to reduce
poverty to the targeted levels. Continued improvement in the
poverty rate and income distribution level will also require
consolidation of recent security gains and further structural
economic reforms, including those that would flow from the
entry into force of the U.S.-Colombia Trade Promotion
Agreement.
DRUCKER
SIPDIS
SIPDIS
E.O. 12958: N/A
TAGS: PTER PGOV PREL ECON CO PHUM PREF
SUBJECT: URIBE COMMITTED TO POVERTY REDUCTION BUT SUCCESS
WILL BE CHALLENGING
--------------
Summary
--------------
1. Colombia's poverty rate of 49 percent -- which reaches
almost 70 percent in rural areas -- exacerbates the
urban-rural divide and feeds social conflict. President
Uribe has boosted social spending, and improved economic
growth and targeted social programs have cut poverty rates.
Still, Uribe's public emphasis on security, coupled with the
magnitude of the poverty problem and a high level of
inequality, means he receives little public credit for his
anti-poverty efforts. The GOC's new "Strategy for
Strengthening Democracy and Social Development" links
increased social spending to the GOC's security policy and
the Free Trade Agreement with the U.S. Progress on all three
will be needed if the GOC is to achieve its goal of reducing
the poverty rate by at least ten percent by 2010. End Summary
--------------
Half the Country in Poverty
--------------
2. Approximately 22 million Colombians live under the
poverty line, with over 6.5 million in extreme poverty.
Poverty is defined as an individual living on less than USD
100 per month, and extreme poverty is USD 40 or less per
month. Between 1970 and 1995, sustained economic growth led
to the poverty rate dropping from 69 percent to 49 percent.
In 1996, the economy started to slow and poverty began to
rise. By 1999, Colombia was in the throes of its worst
recession in seventy years: GDP plummeted by 4.2 percent and
a decade's progress fighting poverty evaporated. By 2005,
steady economic growth and strong anti-poverty programs
brought the poverty rate back to 1995 levels. Colombia's
poverty rate is historically higher and more variable than
the regional average: between 1997 and 2005 Latin America
poverty gradually dropped from 43.5 percent to about 41
percent.
Poverty Rates in Colombia
Year Poverty Rate Extreme Poverty
1995 49.5 15.5
1996 50.9 17.2
1997 52.7 18.5
1998 55.3 20.8
1999 57.5 25.4
2000 55.0 19.0
2001 55.2 18.7
2002 57.0 20.7
2003 50.7 15.8
2004 52.7 17.4
2005 49.2 14.7
--------------
Income Distribution and the "Two Colombias"
--------------
3. Income distribution in Colombia is among the worst in the
world. Colombia's Gini index (which measures income
inequality) was 56.0 in 1995, rose to 60.0 in 1999 and
dropped back to 55.3 by 2005. It is now similar to that of
Brazil and Peru. Poverty is more acute in rural Colombia
than in urban areas. Over 68 percent of the approximately 12
million people living in rural areas in 2005 were
impoverished, versus 40 percent in the cities. The extreme
poverty rate is less than five per cent in Bogota, but it is
almost 50 percent in rural departments like Choco. The
number of rural poor is less now then it was in the late
1990's, but it stayed relatively flat between 2003-2005.
4. Pervasive rural poverty creates what Santiago Rojas,
director of the Foundation for Good Government, calls the
"Two Colombias." Former Minister of Economic Development
Mauricio Cardenas says Colombia's sharpest divisions, rural
vs. urban, poor vs. non-poor, and strong state presence vs.
weak state presence, largely coincide. Moreover, Colombia's
income inequality means economic growth trickles down slowly
to the poorest segment of the population. He estimates that
only half of recent poverty reduction reflects growth: the
other half comes from programs targeting the poor. Cardenas
said the key to bridging all three divides is to achieve
sufficient state capacity to deliver quality education and
health care to the rural poor. Cardenas and Rojas said
poverty, inequality and the rural-urban divide fuel
Colombia's social conflict and impede growth.
-------------- ---
Security Efforts Eclipse Social Welfare Programs
-------------- ---
5. The public sees President Uribe as weak on poverty.
Gallup polling in late 2006 showed Uribe's approval rating
exceeded 60 percent on all issues but one: his handling of
poverty where a majority disapproved of his policy. Andres
Davila, Director of Security Issues at the National Planning
Department, said he worries that the emphasis on security
creates the appearance that other issues do not matter. A
recent editorial in "El Tiempo," Bogota's leading daily
newspaper claimed Uribe's focus on security suggests he does
not care about poverty.
6. Despite the negative public view, Uribe has boosted
spending on social programs from just over 7 percent of GDP
in 2002 to almost 8 percent of GDP in 2006. Fabio Sanchez,
director of the Center for Economic Development, said most of
the increase was on education: during this period the number
of primary and secondary public school graduates went up by
almost 20 percent and the number of college graduates
increased by 30 percent. Similarly, the number of people
receiving health subsidies increased by over 70 percent,
rising from 10.7 million in 2002 to 18.6 million in 2006.
Increased spending on Internally Displaced People (IDPs) was
especially dramatic: while the government spent less than
USD 300 million on IDPs from 1995-2003, it spent over USD 800
million between 2003-2006. Throughout the period, social
spending substantially exceeded security expenditures.
7. "Families in Action," the GOC's flagship
poverty-reduction program, began in 2001 under President
Pastrana with about 80,000 families participating. The
number of families increased under Uribe to 500,000 families,
or 20 percent of all families in extreme poverty, by 2005.
The program gives conditional cash subsidies to the poor and
is widely credited with contributing to the sharp fall in
poverty and extreme poverty between 2002 and 2003. Subsidies
are discontinued if children do not attend school and or fail
to have regular health check-ups. The program has been a
notable success: school attendance and child height, weight,
and vaccination rates all increased, while child labor and
birth rate statistics decreased.
--------------
Spotlight on Poverty
--------------
8. In mid-November President Uribe announced a new
development plan that envisions reducing the poverty level to
39 percent in four years and to 15 percent by 2019. The plan
contemplates a billion dollars per year of new funding for
health, education and poverty reduction programs. Money has
not yet been budgeted for the plan which will be considered
in a special session of congress starting in the first week
of February. The plan is incorporated into the
administration's draft "Strategy for Strengthening Democracy
and Social Development" which focuses on social welfare
programs and poverty reduction. A major component of the
strategy is to strengthen the economy through structural
reforms and trade liberalization. The strategy links a
U.S.-Colombia Trade Promotion Agreement to GDP growth, job
creation and poverty reduction.
9. Families in Action will be the "axis of intervention" for
poverty reduction under the new development plan according to
Juan Pablo Franco of Accion Social (which manages the
Families in Action program). The number of families included
would rise to 1.5 million, or about five million persons by
2010. Local governments would hire approximately 30,000
social workers to help poor families meet specific
anti-poverty benchmarks. Benchmarks include, obtaining
government-issued identification documents which are key to
employment and access to social programs, going to school,
and establishing clear title to land.
--------------
Comment
--------------
10. Colombia's poverty rate has fallen over the past four
years due to strong GDP growth and effective social programs.
Unfortunately, the recent gains in poverty reduction and
income equality have only returned Colombia to its
pre-recession level of 1995. The GOC's plan to reduce
poverty to between 35-39 percent by 2010 will test historic
limits of Colombia's social development, and may not be
attainable given the current disparity in urban vs. rural
incomes. Social programs alone are unlikely to reduce
poverty to the targeted levels. Continued improvement in the
poverty rate and income distribution level will also require
consolidation of recent security gains and further structural
economic reforms, including those that would flow from the
entry into force of the U.S.-Colombia Trade Promotion
Agreement.
DRUCKER