Identifier
Created
Classification
Origin
09LAPAZ1417
2009-10-06 17:31:00
CONFIDENTIAL
Embassy La Paz
Cable title:  

BOLIVIAN ANTIPOVERTY PROGRAMS ADDRESS REAL NEEDS

Tags:  ECON PREL PGOV EAID BL 
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C O N F I D E N T I A L LA PAZ 001417 

SIPDIS

E.O. 12958: DECL: 09/29/2019
TAGS: ECON PREL PGOV EAID BL
SUBJECT: BOLIVIAN ANTIPOVERTY PROGRAMS ADDRESS REAL NEEDS
AND POLITICAL AIMS

Classified By: Charge d'Affaires John Creamer for reasons
1.4 (b, d)

- - - - -
SUMMARY
- - - - -

C O N F I D E N T I A L LA PAZ 001417

SIPDIS

E.O. 12958: DECL: 09/29/2019
TAGS: ECON PREL PGOV EAID BL
SUBJECT: BOLIVIAN ANTIPOVERTY PROGRAMS ADDRESS REAL NEEDS
AND POLITICAL AIMS

Classified By: Charge d'Affaires John Creamer for reasons
1.4 (b, d)

- - - - -
SUMMARY
- - - - -


1. (SBU) With an overall poverty rate of 60% and with 37% of
the population in extreme poverty, the government of Bolivia
has made the fight against poverty a priority. Although
programs may be concentrated in areas where the Movement
Toward Socialism (MAS) party hopes to win during the upcoming
elections, at the same time they reach a needy population.
The GOB has three conditional cash transfer programs -- for
retired persons, school children, and pregnant woman or those
with newborns. The programs are designed to raise school
attendance and lower malnutrition rates in young children and
have helped lift some out of poverty. They also promote
health and education, two of the most important inputs for a
productive society. Financed mainly by hydrocarbons taxes
and international donor support, the programs reach 30% of
the population and are seen as one of the most important
successes for the Morales government.

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CONTEXT -- 60% POVERTY, PREVALENT MALNUTRITION
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2. (U) Of Bolivia's almost 10 million people, almost 6
million remain below the poverty line, 3.7 million of whom
live in extreme poverty. The poverty line in 2005, as
defined by the GOB, was 336 Bolivianos a month ($42) per
household, with extreme poverty defined as less than 184
Bolivianos a month ($23). Poverty is worse among the rural
and indigenous populations -- 77% of the rural population are
poor, and 64% live in extreme poverty; compared to 50%
poverty in the urban areas, with 23% in extreme poverty.
Additionally, 77% of indigenous are poor (61% in extreme
poverty),compared to 59% of non-indigenous (25% in extreme
poverty). Country-wide, the poorest regions are Potosi,
Chuquisaca, and Pando. The wealthiest are Santa Cruz and
Tarija. which possess gas reserves.


3. (U) Despite more than a decade of sustained economic
growth, the lives of poor Bolivians have not improved
significantly. With a life expectancy of 65.4, many

Bolivians lack access to health care and basic services.
Bolivia ranks 113th out of 182 countries on the UN's 2009
Human Development Index. Although many believe that few
Bolivians are dying of hunger, chronic malnutrition affects
22% of children under 5 and 42% of indigenous children are
stunted due to malnutrition. Bolivia has one of the most
unequal income distributions in the world. By the UN's
measure of income inequality, the GINI index, Bolivia is
ranked 7th worst in the world with a GINI of 58.2, behind
only a handful of African countries, Colombia, and Haiti.

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GOB'S ANTIPOVERTY PLAN -- "PLAN VIDA"
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4. (U) The GOB has put forward a "Plan Vida" to address
multiple social and economic factors that contribute to
poverty. The plan consists of a variety of programs in five
key areas: productive development, food and nutrition,
housing and basic services, access to health care education,
and legal rights, and the development of community and social
organizations. The plan is ambitious and includes a wide
variety of programs, including fortified food supplements and
the issuance of ID cards and birth certificates free of
charge (without an ID you cannot receive benefits from many
other programs). Although the plan has good intentions,
implementation is slow.


5. (U) The GOB has been most successful in implementing
conditional cash transfers, called "bonos," to improve access

to food, nutrition, health care and education. The bonos do
not exclusively target the most impoverished groups in
society (e.g., indigenous groups or the rural poor),but they
do address key areas that help to build a more productive and
healthy society, thereby fighting poverty. GOB social
spending is approximately 2.5% of GDP, falling in the middle
range of other countries in the region, and just slightly
lower than what the World Bank determines is needed to
eliminate extreme poverty. In early October 2009, the GOB
announced an ambitious target of $10 billion dollars in total
social spending over the next five years. Although the
details and financing remain unclear (the GOB has appealed to
the World Bank and other international lenders),the
announcement underscores the GOB's interest in signaling
poverty reduction as a top political priority.


6. (C) The bono programs are financed from a combination of
international donors, tax revenue from the hydrocarbons
sector, revenue from GOB shares in private companies, and
debt forgiveness under the HIPC (Highly Indebted Poor
Countries) initiative. The Morales government has
significantly increased taxes on the hydrocarbons sector in
order to make use of the income from Bolivia's resources for
its own people -- directing hydrocarbon revenue toward bonos
and education. The Inter-American Development Bank (IDB) is
currently considering $20 million in support for Plan Vida.
The World Bank is providing $40 million for Plan Vida, $17
million going directly to fund the bono "Juana Azuduy" (for
pregnant women or new mothers) in the 52 neediest
municipalities. It is believed that Venezuela also provides
some financing for the bonos.

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RENTA DIGNIDAD -- BONO FOR THE RETIRED
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7. (U) Renta Dignidad began as BonoSol in 1997. The Morales
government has increased its funding and lowered the
eligibility age. It is a cash payment given to all Bolivians
over age 60 who are not working or receiving a regular
pension. Each beneficiary receives 200 Bolivianos a month
(approximately $30/month),distributed at local banks.


8. (SBU) Renta Dignidad benefits are funded 30% by the
hydrocarbons tax and the rest by income generated by GOB
shares in private companies. However, this revenue is in
jeopardy because the GOB shares in these companies was held
and managed by the Administrator Pension Funds (AFP),but now
the GOB is re-nationalizing some of these companies (i.e.
electric companies). It remains to be seen if the GOB will
continue to direct the revenue to this program or if it will
be caught up in the larger GOB budget. The sustainability of
funding is questionable due to this and to the fact that
hydrocarbon revenues are volatile.


9. (U) Due to its reach and relatively large payment, Renta
Dignidad has an important impact on poverty, especially in
rural areas. The World Bank believes that in absence of the
benefit, the extreme poverty rate for those over 65 would be
19% higher throughout the country and 31% higher in rural
areas. The level of the benefit represents more than 25% of
total household income for the poorest 10% of the population.
Renta Dignidad had 825,600 beneficiaries in 2008, more than
90% of the target population in both rural and urban areas,
and costs more than $250 million.

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BONO JUANCITO PINTO -- SCHOOL CHILDREN
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10. (U) The Bono Juancito Pinto Program is directed at school
children, with the aim of increasing school attendance and
completion. It was introduced by the Morales government in

2006. Under the program, all children who attend public
schools at least 75% of the time receive 200 Bolivianos ($30)

in a one-time payment each school year, paid at the school by
the Bolivian Armed Forces. The program began for students up
to 5th grade, was extended to 6th grade in 2007, and extended
again up to 8th grade in 2009. In 2008 the program reached
1.8 million students and paid out $52.5 million. The program
is not offered in private school and, therefore, the
recipients tend to be from the poorer population. The
program seems to be effective in keeping kids in school --
the World Bank estimates school attendance rates at 96% up to
6th grade.

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BONO JUANA AZURDUY - PREGNANT WOMEN AND YOUNG CHILDREN
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11. (U) As part of Plan Vida, the GOB has also promulgated a
Zero Malnutrition Program in order to meet the nutritional
requirements of children under 5 years old. The program
emphasizes pregnant and lactating mothers, and children under

2. It encompasses education, fortified food supplements, and
improvement in health networks, with the goal of lower
malnutrition rates and infant mortality. In 2009 the GOB
created the Bono Juana Azurduy with a budget of $32 million.
The bono involves a payment of 1820 bolivianos ($260) spread
out over 30 months to pregnant women and mothers of children
under 2, paid during periodic health check ups. Each health
check up also addresses educational needs to teach the
mothers proper nutrition and hygiene.


12. (U) The program began in the 52 most vulnerable
municipalities and is being expanded to include more than 100
municipalities. The payment is equal to about 15% of the
average household income of the recipients. This bono
reaches the poor more effectively than the other programs as
60% of the beneficiaries are in the poorest 20% of the
population. More beneficiaries are in urban areas due to
access to health clinics where the payment is dispersed.
Through this and other social programs, the mortality rate of
children under 5 years old has dropped from 65 per 1000
children in 2005, to 57 in 2007 (and down from 84 in 2000).


13. (U) There is also a school breakfast program that is
financed and administered by municipalities and is not
nation-wide. Still, the program reaches approximately 1
million students, with a greater concentration in the urban
areas.

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COMMENT -- THE RIGHT TARGETS?
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14. (C) None of the GOB's social protection programs
specifically target people by income or poverty level, but
instead aid categories of people who tend to be poor (e.g.,
the aged, young families, public school students). By
distributing the benefits only to public school children or
those that use public health clinics, beneficiaries tend to
be from the poorer segments of the population. Opposition
figures and some social analysts criticize the programs for
providing more benefits to those areas that support the MAS,
but it can be argued that MAS supporters also tend to be
poorer. Which municipalities will be covered by an expansion
of the Bono Juana Azurduy Program is a point of contention
for the IDB. Although the World Bank financed the original
52 municipalities and believes that those were the neediest,
the IDB believes that the GOB has selected areas for the
expansion of the program without regard to the poverty
indicators or real need. Omar Zambrano, Country Economist
for the IDB, says the IDB is awaiting justification of the
selection criteria before approving its $20 million in
support of the program.


15. (C) The World Bank and the IDB are concerned with
implementation problems. Both say Plan Vida was designed by
the GOB without consultation or coordination with the local
governments or the various GOB agencies that will be
responsible for implementation. World Bank staff believe the
plan is an idealistic one, that it does have the proper goals
to address Bolivia's health and education needs, but that
many portions will not be carried out effectively due to lack
of coordination and technical capacity. Such concerns aside,
the GOB's three bono programs are having positive impacts on
society and on poverty levels -- the 60% poverty rate today
is down from 63% in 2004 -- and have also provided political
benefits for the governing MAS.
CREAMER