Bali bombings slow down pace of poverty reduction
Bali bombings slow down pace of poverty reduction
Dadan Wijaksana, The Jakarta Post, Jakarta
After increasing slightly last year, poverty in the country is
expected to decrease again this year although the impact of the
Bali bombings will likely limit its pace, according to a report
issued by the World Bank.
The bank said that the number of poor Indonesians would have
decreased to 15 percent of the population this year from 16
percent last year if the Bali tragedy had not occurred. But
because of the bombings, the decline will only be 15.5 percent,
it said.
"Assuming the attack only affects (economic) growth, not the
(rupiah) exchange rate and prices, about 1 million more people
will be in poverty than without the attack," said the World Bank
report, which was released last week prior to the annual meeting
of the country's major donors under the Consultative Group on
Indonesia (CGI).
CGI is slated to gather at a two-day meeting starting Tuesday.
Such a projection, the bank added, was based on the assumption
that there would be a slowdown in the country's gross domestic
product (GDP) growth from the initial projection of 4 percent to
3.3 percent.
The figure could have been much worse had the government not
moved quickly to address the anticipated 3 percent depreciation
in the exchange rate of the rupiah against the U.S. dollar as a
result of the bombings, otherwise it would have further raised
the poverty rate to 16.7 percent in 2003, the report said.
The rupiah's depreciation has been the main driver for the
increase in basic food prices, including rice. The poor spend a
relatively large portion of their income on food, making them
vulnerable to changes in food prices.
Nevertheless, the slowing pace of poverty reduction will leave
a black spot on the country's previously exceptional efforts in
reducing the number of poor people.
Although the progress was stalled in 2002, poverty reduction
previously run at a fast pace. The number of poor people has
fallen substantially from 26.9 percent of the population in 1999
to 16 percent in 2002.
The reports attributed the rapid decline of poverty mostly to
increased real wages and growth in economic sectors that provide
jobs for the poor, combined with change in relative prices in
favor of the poor. Food prices have decreased since 1999. Even
though the price of rice increased in late 2001, it remained
below the level recorded in January 1999.
The poverty gap, a measure that defines the average shortfall
below the poverty line relative to the poverty line, also fell
from 5.27 percent to 2.75 percent during the same period.
The report added that the 2002 poverty gap implies that it
would only cost around Rp 7 trillion to bring all the poor up to
the poverty line on a yearly basis.
While poverty has declined since 1999, it rose slightly by 1.3
percent between 2001 and 2002. The increase was primarily caused
by price rises in various basic foods, especially rice as a
result of the floods that hit the country in early 2002.
Under domestic measures, the Central Bureau of Statistics
(BPS) says that an Indonesian is regarded poor when he or she
only earns some Rp 90,000 per month.