1. HOUSEHOLD BUDGET SURVEY EVALUATION

2. PROJECT OVERVIEW PRECURSORS State Program on Poverty Reduction & Sustainable Development (2008-2015) CSOs given the opportunity to monitor the implementation of welfare programs GOALS & OBJECTIVES Assess infrastructure and quality of public services to meet basic human needs o Analyze current spending levels and structure o Evaluate family spending needs Provide recommendations on the Household Budget Survey methodology o Develop more accurate poverty measures o Identify inconsistencies in minimum subsistence level estimates Develop recommendations to increase access to public services o Focus on access to education, health and social protection o Address regional differences Economic Research Center 2 1234 5

3. METHODOLOGY SURVEY: A combination of random, systematic and stratified sampling Representative sample o 5,754 women & 5,986 men o 1,550 urban & 1,450 rural households ADVOCACY: Public dialogue o Questionnaires drafted in discussion with government agencies, CSOs and other stakeholders Resource complementarity o Complements ERC initiative with UNICEF Economic Research Center 3 Survey of 3,000 households Budget analysis Bench- marking RESEARCH APPROACH: 1234 5

4. SURVEY RESULTS IN BRIEF Over 2007-2009 public services spending increased by nearly 90% to 3.2 billion AZN Economic Research Center 4 DimensionComponentObservationOutcome EducationSpending by resource cost 79% absorbed by salaries Low long-term investment in human capital HealthSpending by function Hospitals (high) vs. primary care (low) ↑ health costs for the population Social protection Minimum subsistence level ↑ prices and informal payments Benefits do not meet spending needs 1234 5

5. ACCESS TO EDUCATION Spending on education  3.1% of GDP vs. 5% in the EU 1,600 new schools established over the past 5 years CONCERNS Economic Research Center 5 1234 5 Quality of secondary education o 23% of students failed their high school graduation exam o Over 60% could not pass general university admission test o Azerbaijan doing poorly in international education rankings Access to preschool education o 93% of respondents do not send their kids to preschool because:

6. HEALTH SERVICES Health spending  $65 per capita vs. $100 internationally recommended 90% of respondents are satisfied with the quality of health services CONCERNS Informal payments Rising costs of transportation to medical facilities Rising costs of hospitalization Economic Research Center 6 1234 5 Reasons for not buying the necessary medication Many resort to self- and home-treatment

7. SOCIAL PROTECTION Social protection spending  2.9% of GDP vs. 8% in OECD countries Official poverty level constituted 13.2% Economic Research Center 7 1234 5 I am satisfied with the economic level of my household CONCERNS Perceived poverty is higher than official rate (regional differences) Nearly 50% believe their children live in below average conditions 59% would not consider having another child even with additional resources

8. REGIONAL DIFFERENCES Economic Research Center 8 1234 5 Monthly targeted social assistance by region Source: State Statistical Committee

9. CONCLUSIONS Budgeting Public services spending structure is not optimal Bulk of spending absorbed by direct payments not long-term investments Infrastructure and quality of public services Poor access to preschool education Declining quality of secondary education Poverty level Informal payments and price fluctuations affect minimum subsistence level Social benefits do not cover minimum subsistence level for children Economic Research Center 9 1234 5

10. RECOMMENDATIONS Methodology improvements Adopt relative poverty as a measure of poverty in Azerbaijan Calculate poverty on the basis of household consumption levels Poverty Reduction Develop tailored poverty alleviation programs for individual regions Broaden the health insurance program and increase access to health services Increase the autonomy of health care providers Conduct an evaluation of secondary schools and increase their autonomy Eliminate informal payments for health services and education Economic Research Center 10 1234 5

11. THANK YOU ECONOMIC RESEARCH CENTER Baku, Azerbaijan AZ1065 Jafar Jabbarli 44, Caspian Plaza 3, floor 9 Phone: (+99412) 437 32 30 Fax: (+99412) 437 32 40 E-mail: office@erc-az.org; erc-az@azeurotel.comoffice@erc-az.orgerc-az@azeurotel.com www.erc-az.org Economic Research Center 11