Social Convergence, Inclusion and Poverty Reduction in Armenia Vahram Avanesyan, Director, AVAG Solutions, Armenia. Black Sea Conference on Regional Integration and Inclusive Growth February 23-24, 2009

Main facts about poverty reduction in Armenia In 1999 first comprehensive attempt to estimate poverty incidence reveled:  Over 56% of population is poor, and  Over 27% leave in extreme poverty Between 1999 and 2007 poverty incidence in Armenia declined by more than two times In the same period extreme poverty declined by almost 7 times

Main contributors to poverty reduction between Strong economic growth  Per capita GDP growth – 2.4 times  Growth elasticity of poverty – 0.45 Decline in income inequality  Gini down by about two times Expansion and more targeted social protection  Per capita social protection expenditures increased by 4.2 times Private Transfers from abroad up by 100%

Real GDP, Employment and real wage indices, Armenia and

Income structure

Income and Consumption Inequality trends

Impact of social protection expenditures on poverty

Private transfers reduce poverty risk but rich benefited more

Social convergance in Republic of Armenia ( Region/Marze level) Poverty by Region 1999 Poverty by Region 2007 STDEV-13.2 Min/Max gap percentage points STDEV-5.5 Min/Max gap-18.4 percentage points

Projected Impact of SDP social protection policies on poverty ActualSDP Projections

Poverty challenges posed by the crisis Scenario 1  Protectionism  Slow down of economic reforms  Expansion of social protection beyond fiscal sustainability Scenario 2  Accelerate and enhance economic reforms  Provide more targeted social protection maintaining fiscal sustainability

Poverty challenges posed by the crisis First Scenario Second Scenario

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