economy

Progress made on poverty

la prensa

rising hope: Though the country’s rural and indigenous populations continue to be most vulnerable to poverty, a recent study by Economic Commission for Latin America and the Caribbean says there are 176,000 fewer Panamanians living in extreme poverty since 2001.1108209

During the past seven years, 131,000 people slipped into poverty in Panama. That was the conclusion of a study performed by the Economic Commission for Latin America and the Caribbean (Cepal) released this week on trends in poverty and income distribution between 2001-2007.

Nevertheless, according to the methodology applied by the study, the country’s poverty rate dropped almost eight percent in that same period, falling from 36.7 to 28.6 percent. And the number of people living in extreme poverty, or those existing on less than $36 a month in rural areas and less than $47 a month in urban areas, also decreased, from 19.2 to 11.7 percent.

With these advances, Panama doesn’t only meet the first goal of the Millennium set by the United Nations, namely to reduce by half the percentage of the population living below the poverty line by 2015, “but it is also highly likely that the country can meet the more ambitious goal of cutting in half the country’s the total number of people living in poverty,” said the Cepal report.

The study also highlighted what it perceived as a reduction in the income gap between the richest and poorest in Panamanian society, noting that the Gini coefficient, a measure of wealth distribution, fell from 0.55 in 2001 to 0.52 in 2007.

Cepal researchers identified the key factors in this progress included the country’s relatively high rate of economic growth, an average of 5.4 percent per year; the “more than 310,000 new jobs created;” and an improvement in the income level of people falling into the country’s most vulnerable demographics, a development that has been partly linked to the Red de Oportunidades program. The government-subsidized program provides families living in extreme poverty with $50 in aid.

Though the Cepal study praised the program for helping to reduce the economic hardships of the poor, the overall impact of the Red de Oportunidades program was considered “insufficient,” especially when the monthly cost of the basic food basket now stands at about $258.

The Comptroller General's Office will ultimately have the last word on the depth of progress made over the last few years in Panama, once it finishes its latest survey of living standards toward the end of the year. But, taking into account the Cepal database of household surveys and the latest figures on social spending, it expects to find that the upward trends identified by the study are correct.

“We believe that the methodology used for the study is correct,” said the president of the Colegio de Economistas, Raúl Moreira, when asked about the doubts that some groups have expressed over the veracity of this kind of socio-economic analysis.

Despite the groups’ mostly positive view of the Red de Oportunidades in its efforts to reduce poverty, especially in rural areas, it cautioned that it is still necessary to expand the coverage of the program and ensure it’s continued by the government after next year’s election.

“There’s a lot to do in terms of reducing income gaps. It’s there that the progress has not been as significant,” added Moreira.