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Socioeconomic Commentaries

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Despite the constant economic growth, people think they are poorer
Iurie Gotisan, 2 June 2004

1. Poverty Reduction and Economic Growth Strategy (PRSP) approved

On May 19 Government approved PRSP, a document including social economic policies to be implemented over 2004-2006 to ensure sustainable economic growth and reduce poverty. In the eyes of many Republic of Moldova is the poorest country in Europe. Strategy indicates that despite the overall 21.6% GDP growth over the last three years, average monthly salary rose by 70.1% and average monthly pension by 93%, poverty still remains to be a major issue. Moreover, it is estimated that around 40% of the population live below subsistence level, whereas 35-40% of the working population has left the country in search for a decent earning.

On May 25, the final PRSP version was submitted for the evaluation and final approval of the World Bank. Authorities expect WB to approve the document by July so that it becomes operational. Noteworthy, PRSP has been developed for four years. In 2000 WB Governing Board approved the preliminary PRSP developed by Braghis Government. After Braghis Government was ousted in spring 2001, the document was revised and later approved in 2002. However, after civil society and international organisations voiced their lingering concerns with regard to the quality of the document, the period of working out on the document was extended for another year.

Furthermore, PRSP would be also submitted to USAID, UNDP, CIDA, other partner agencies that would bring their technical assistance priorities in line with the strategy. Chisinau is now considering how the Parliament would approve PRSP, as a law or as a resolution. Experts believe the document should not have the status of the law.

Being a guideline for future technical assistance programs PRSP would secure the most needed and advantageous foreign aid. A special attention shall be given to the feasibility and clarity of the priority actions developed by the Government, as well as to the monitoring mechanism that would allow for on-going improvement of the document.

Noteworthy, the current PRSP version is of a higher quality than the previous drafts and is among the best similar documents developed in Moldova since independence. However, experts point to certain shortcomings, some of which would be addressed upon public debates over the document. According to IMF and WB standards the Governments itself should identify and acknowledge the strengths and weaknesses of Poverty Reduction Strategies as well as risk factors.

2. Poverty is becoming a major problem for more and more people

Implementing PRSP is paramount. Great many Moldovan citizens, around 90% consider themselves poor according to the findings of an opinion poll commissioned by Institute for Public Policies and conducted by CIVIS in April-May 2004 at the order of. Interviewees had to assess their welfare on a scale of 1 to 10, "poor" and "rich" respectively. Almost 10% rated their welfare at 1 point thus considering themselves "poor", 13.3% rated it at 2 points, 21.9% at 3 points, 21.3% at 4 points, and 24.6% at 5. Only 9.2% rated their welfare from 6 to 8 points. What is striking is that none of the interviewees rated his/her welfare at 9 or 10 points.

At the same time, 42.8% of the interviewed claim current income of their family is not sufficient even "for the essentials of life", while 40% - "only for essentials of life". Moreover, 86.8% of the interviewed say they are not satisfied with their wage and only 8.8% are "quite happy" or "very happy" with it. As compared to 2003 there was registered a significant increase in people's fear of price hike 50% (a 23% increase over last year), of poverty 64% (11% increase over last year), and future of the children 52% (8% increase).

35.8% believe life in Moldova would get better or slightly better in one year, 25.5% believe nothing would change in one year. Still 43.2% of the interviewed say this year economic situation is "better" or "slightly better", whereas 34.7% believe it is the same, with only 8.4% being satisfied with the current state of affairs, while 47.6% are not quite satisfied or not satisfied at all. Persons interviewed said that to improve the socio-economic situation in the country it is necessary to improve law enforcement, increase the role of the state in administering economy, attract more foreign investments, boost industrial output and fight corruption.

Noteworthy, many people live from subsistence farming. People judge economy by the money in their pockets. Last opinion poll registered a significant increase in the unhappy or unsatisfied ones. Almost 40% believe economic situation worsened after the incumbent Government had come to power. The following factors that worsened the situation are cited: drop of income, price hike and no job.

Opinion poll also indicates that the great majority of Moldovans wish for a more homogenous society without any huge inequalities in income. It is very important how people perceive social injustice, as any increase in inequality brings about a decrease in solidarity and trust among members of the society. The poll also shows that 80% view Moldovan society as highly unjust, with great many poor and a handful of extremely rich.






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