Many families ‘transient poor’

WEAK targeting systems that result in significant leakages in government antipoverty programs, as well as high inflation and the recent crises, are likely to worsen the country’s poverty situation, according to an expert from the state-owned think tank Philippine Institute for Development Studies (PIDS). The situation is leading to rising numbers in the so-called transient poor, or those nonpoor households who were greatly impoverished by crises as, say, Typhoon Ondoy.

PIDS senior research fellow Dr. Celia Reyes said that while the official 2009 poverty figures have not yet been released, the country’s poverty situation likely worsened from 2006 due to various shocks and program implementation problems.

“What these recent challenges—the price shocks, global financial crisis, natural calamities—imply on the poverty situation [are that they] actually aggravated the poverty situation. [They] impacted on certain sectors and because of the coping strategies adopted by the government have also, in some cases, made matters worse,” Reyes said in a presentation at a press conference for the Development Policy  Research Month.

“[A] poverty rate of over 30 percent [in 2006] is really a big problem and with the recent shocks, we really need to focus on this particular issue. I think it would not be unlikely if we again see an upward trend in 2009 because of all of these shocks,” she added.

Reyes said these shocks include the price shocks of 2008 and the global economic crisis, and natural calamities like typhoons Ondoy and Pepeng in 2009.

The leakages experienced by many government programs like the rice-subsidy program of the National Food Authority (NFA) also worsened the situation of the poor.

The PIDS senior fellow said the effects of these shocks are still felt by Filipinos until today. In fact, Reyes said commodity prices have remained above precrisis levels, and overseas Filipino worker remittances only increased by 5 percent, far from the double-digit year-on-year increase of around 13 percent before the crisis.

While the government was able to roll out antipoverty programs like the NFA rice-subsidy program, leakages have been significant due to weak-targeting systems.

Reyes said leakages in the NFA rice-subsidy program reached 69 percent, while the exclusion rate was pegged at 27.3 percent.

“For instance, in the case of the price shocks and the global financial crisis some households had to withdraw their children from school and so we know that this could have very important implications not just now but in the future. In terms of health responses, we found [out] that some households did not seek medical attention or shifted to generic drugs or herbal medicines to cope with the impact of these shocks. So these recent challenges would definitely impact on poverty,” she said.

Reyes said high inflation has not also helped in improving the situation. She explained that rice prices, for example, have not returned to precrisis levels or around P24 to P25 a kilo.

She said that rice prices peaked in 2008 at around P40 a kilo, while rice prices today are still at P35 a kilo. This is significantly higher than the P24-a-kilo level before the food crisis.

Even oil prices have not totally returned to precrisis levels. Reyes said fuel prices surged to 17 percent in 2008. This is significantly higher than the 3.3-percent average inflation for fuel in 2007.

“We know that with this kind of program [referring to rice subsidy] there is cost to our government but that’s OK if the benefits will go to the poor, but unfortunately we see that there is a very high leakage rate, meaning that actually a large proportion of the beneficiaries are nonpoor,” Reyes said.

Further, due to significant leakages and exclusion rates, government antipoverty programs have also not been able to prevent nonpoor households in 2003 from transitioning to being poor in 2006.

Reyes said around 17.3 percent of the poor were poor throughout the period while 13.2 percent were considered “transient poor”—or have transitioned to and from being nonpoor and poor during the period.

This phenomenon can be prevented if the government will be able to implement effective safety nets. These safety nets include crop insurance for farmers who instantly transition from being nonpoor to poor once natural calamities hit the country.

“Large movements in and out of poverty, as I said, would have significant implications and this is where safety nets would really play a role. If we could have effective safety nets that would prevent people from moving into poverty then that would really reduce implications on poverty. Weak targeting is another issue,” Reyes said.

Data from the National Statistical Coordination Board showed that poverty in 2006 at the population level reached 32.9 percent while in the household level, the poverty rate was at 26.9 percent.

The poverty threshold in 2006—or the minimum income needed to meet nonfood and food needs—was pegged at P15,057 per person per year. The food threshold—the minimum income needed to meet food requirements—was pegged at P10,025 per person per year. –Cai U. Ordinario / Reporter, Businessmirror