IRAQ'S POVERTY REDUCTION STRATEGY - CUT POVERTY BY 30 PERCENT

UNCLAS SECTION 01 OF 03 BAGHDAD 003129 ***CORRECTED COPY*** CHANGES MADE TO SUBJECT LINE, PAR 1, PAR 3 SENSITIVE SIPDIS STATE FOR NEA/I/ECON E.O.12958: N/A TAGS: ECON EFIN EAID PGOV PREL IZ SUBJECT: IRAQ'S POVERTY REDUCTION STRATEGY - CUT POVERTY BY 30 PERCENT BY 2014 BAGHDAD 00003129 001.2 OF 003 Sensitive but unclassified. Please protect accordingly. ¶1. (U) Summary: On November 24, the Council of Ministers (CoM) endorsed Iraq's first Poverty Reduction Strategy (PRS),a requirement for the release of any potential World Bank Development Policy Loan. The PRS aims to reduce by 30 percent the number of Iraqis living below the country's poverty line by 2014. Iraq's current poverty rate is 23 percent. The 2010 proposed budget takes the first step toward this goal by putting more emphasis on health, education, and environmental issues. The GOI recognizes that its human and budget resources in the near term will not be sufficient to undertake all activities envisaged in the PRS, so the GOI intends to seek donor support. End Summary. DRAFTING THE POVERTY REDUCTION STRATEGY (PRS) ¶2. (U) The PRS was drafted by a PRS High Committee with the assistance of consultants paid for by the World Bank and the United Nations. The PRS High Committee is composed of representatives (mostly at the Director General level) from the Ministries of Finance, Planning, Education, Health, Labor and Social Affairs, and Women's Affairs - together with the KRG Ministries of Planning and Labor and Social Affairs. The Committee is chaired by Dr. Mehdi Al-Alak, Deputy Minister of Planning and Development Cooperation and Chairman of the Central Organization for Statistics and Information Technology (COSIT). COSIT published the 2007 Household Socio-economic Survey, another World Bank project, as well as the "Status of Human Development in Iraq" and "Iraq Poverty Assessment" reports. PRS OBJECTIVE: HALVE POVERTY BY 2014 ¶3. (SBU) The five-year PRS seeks to reduce poverty and raise the level of human development in Iraq, specifically reducing the rate of poverty by 30 percent (to around 16 percent) by 2014. According to the Iraq Socio-Economic Survey conducted in 2007, 6.9 million Iraqis (22.9 percent of the population) have incomes below the country's poverty line of approximately USD 65/month. [NOTE: The poverty line is calculated as follows: 2332 calories/day are considered sufficient for an individual to live. Data from the 2007 Household Socio-economic Survey indicates that the cost of one calorie is 0.482 Iraqi dinars (IQD). Thus, the minimum monthly sum to be spent on food for a person to survive is 34,250 IQD. Basic non-food costs are estimated to be 42,646 IQD per month. Taking the food and non-food costs together yields a poverty line at an income of IQD 76,896 per person per month (about USD 65). END NOTE.] [COMMENT: This data does not account for food price inflation, which we estimate to be 20 percent since the survey was taken, and therefore may underestimate the real cost for food by approximately 18 percent. END COMMENT.] ¶4. (U) According to the PRS, half of the poor reside in rural areas, with Muthanna, Babel and Salah Ad Din provinces having the largest share of their populations under the poverty line. Urban areas, home to 70 percent of Iraq's population, have significant shares of population under the poverty level. Thirteen percent of the poor live in Baghdad and 10 percent in Basra. The disparity between the rich and the poor, as measured by the Gini index, is relatively low in Iraq (30.9 compared to 34.4 in Egypt, 35.3 in Algeria, and 38.8 in Jordan). The poverty gap, that is the gap between average incomes of the poor and the poverty line, is rather small at 4.5 Qincomes of the poor and the poverty line, is rather small at 4.5 percent. Thus, a modest improvement in overall incomes could lift many above the poverty line. PRS APPROACH ¶5. (U) The PRS recognizes two approaches for people to emerge from poverty: increasing their incomes, and reducing their expenditures to meet their basic needs (e.g., health, education, housing, and transportation). The PRS accepts a market-oriented approach to job creation rather than relying on a large government presence in economic activity. The PRS also seeks higher incomes thorough increasing productivity; providing skills training to meet job demand; reducing the illiteracy rate by at least 30 percent; increasing access to primary health care; targeting social protection to the truly needy; increasing housing and infrastructure for the poor;, and strengthening the role of poor women in the labor force. LINK TO THE NATIONAL DEVELOPMENT PLAN ¶6. (U) The Ministry of Planning and Development Cooperation (MoPDC) is mindful of the need for close coordination between the PRS and the National Development Plan (NDP),for which the MoPDC also has the lead within the GOI. Dr. Al-Alak, as Chair of the PRS High BAGHDAD 00003129 002.2 OF 003 Committee, also holds a seat in the NDP Committee. His counterpart, MoPDC Deputy Minister for Techncial Affairs Dr. Sami Mati Polous, is responsible for the NDP and participates in the PRS High Committee as well. The PRS notes that the NDP objectives of sustainable growth, higher incomes, and a fair distribution of benefits flowing from economic development also support the objectives of the PRS. At the same time, the PRS influences the NDP by targeting poor and rural locations, especially in the areas of education and health. PRS LINK TO DONORS ¶7. (U) Since the Council of Ministers endorsed the PRS on November 24, the GOI has been considering how to best engage the donor community for support. (A translated version of the strategy will be circulated to the donors soon.) Dr. Al-Alak has noted that the proposed 2010 budget reflects some of the GOI thinking behind the PRS, e.g., increased emphasis on education, health, and infrastructure. In addition, the GOI would appreciate donor assistance, financial support, and expertise in all the areas identified by the PRS (see paragraph 9 for a summary). A World Bank expert noted that the Bank will look at the PRS in making any decisions on what areas it might support through new assistance programs. MONITORING AND EVALUATION ¶8. (U) An integral feature of the PRS is a section on monitoring and evaluation of those outcomes that can be measured. A High Ministerial Committee to Alleviate Poverty, composed of representatives from the private sector, civil society, donors, the World Bank, ministries and local governments is planned to oversee monitoring and evaluation. This Committee would be supported by an Executive Secretariat with technical committees covering each area covered by the strategy, e.g., income, health, education, housing, women, and social welfare. The Executive Secretariat also would ensure coordination of the PRS with the NDP. SUMMARY OF PRS OUTCOMES TO BE ACHIEVED BY 2014 ¶9. (U) The PRS presents specific outcomes to be achieved and lists activities to help achieve them. Below is a list of the outcomes with a selection of activities for the five-year period (2009-2014) covered by the PRS. Higher income for the poor -------------- - Increase agricultural productivity (infrastructure for marketing; training; rethinking legislation and agricultural policies); - Lending program for income-generating activities (widening lending activities; awareness campaigns; training for loan recipients); - Review the minimum daily wage to make it consistent with changes in poverty level (changes to labor laws; education on workers' wage rights; inspections for compliance with the law); - Employment recruitment offices (coordinate creation of employment offices with private sector; skills training); - Civil society initiatives to support the poor (donors, government support); and - Expand craft centers and training programs (awareness campaigns; civil society to open training centers to the poor). Improve health conditions for the poor -------------- - Improve access to primary health care (training of health care personnel; building health care centers; mobile clinics); - Increase awareness of health risks in poor areas (awareness campaign); - Improve delivery of safe drinking water and sanitation to poor areas (expand current projects); Qareas (expand current projects); - Enhance coverage of poor areas for immunization (strengthening monitoring of disease transmission; immunization campaigns; sustaining supplies of vaccines); - Improve nutrition of the poor (better nutrients in ration system; primary schools to participate in nutrition program); and - Strengthen family planning (awareness campaigns; training of BAGHDAD 00003129 003.2 OF 003 health officials; provide materials). Improve education for the poor -------------- - Eliminate illiteracy; increase enrollment in all levels of education (extend compulsory education to middle school; promote culture of compulsory education; awareness campaigns; monitor drop outs); - Establish primary and middle schools in slums (database of poor areas; adequate budget funding; support program for local schools); - Link social safety net to registration of children in schools (database; amendments to the law; exchange of information between Education Ministry and MOLSA); - Improve efficiency of education in poor areas (priority for educational services and teacher training); - Reduce numbers of illiterate people (mandatory literacy; literacy centers; awareness raising); and - Link vocational training to job market (improve quality of vocational training) Housing and Environment -------------- - State enterprises to build housing for the poor (low-cost housing construction projects; identify beneficiaries; concessional terms; endowments and social security funds to help with financing); - Encourage private sector participation in low-cost housing (measures to encourage private sector to build in countryside; build necessary infrastructure); and - Enabling environment for housing (paving roads; public transport; waste disposal; sports clubs; awareness on environmental issues; maintenance). Social Protection and Poverty -------------- - Proper implementation of the social safety net (decentralization in managing social safety net; database on covered families; training to implement system; expand services; accelerate smart card system; awareness of rights and penalties; targeting the poor; link subsidy amounts to inflation); and - Use poverty level for determining the target group for subsidies (annual update of poverty level; restrict ration card to the needy; transfer amounts from ration card to social safety net; reform, monitor, and control the ration card program) Women and Poverty -------------- - Less disparity between poor women and men (education, literacy; jobs; coverage by social safety net); - Expansion of programs to address decline in school enrollment rates for girls (awareness, priority to girls' schools in poor areas; monitoring enrollment rates; logistics support (transportation),incentives); - Specialized training for poor women (outreach; cooperation with private sector; follow up to evaluate training); and - Revised labor laws and social security (social security fund for workers in informal sector; monitor implementation of social security; awareness; advocacy programs). FORD