World Bank finds out improvement of situation in terms of poverty in Moldova, high risks for future

Chisinau, 16 June /MOLDPRES/ - Moldova has recorded good results concerning the poverty reduction and encouraging prosperity; yet, the main factors which contributed to improving the situation in the past seem to play a much limited role at present, reads a new Poverty Assessment Report for Moldova.

During the last years, Moldova has registered a quick economic growth, accompanied by significant progress in the poverty reduction sector. The economic growth stood at five per cent annually starting from 2000. At the same time, the poverty rate nationally dropped from 68 per cent to 27 per cent in 2000-2004 and continued the descendant evolution, reaching the level of 11.4 per cent in 2014. Nevertheless, Moldova remains one of the poorest countries in Europe, facing more challenges of maintaining the progress, World Bank experts said.

The report, launched in Chisinau today, includes a report itself on poverty reduction and shared prosperity in Moldova: progress and prospects, as well as complementary surveys on the labour market in Moldova and structural transformation and small agricultural exploitations in Moldova: implications for poverty reduction and shared prosperity.

Under the Report, besides the increases recorded in terms of non-agricultural salaries, the pensions represented the most important factor which contributed to the increase in the incomes for the poorest 40 per cent of the population and reduction of poverty. Certainly, the pensions do not represent the most efficient instrument for backing the neediest categories of people. The labour market of Moldova contributed to improving the situation, but namely through results of increase in labour productivity and not by creation of new jobs – in fact, the labour force employment has decreased constantly. Additionally, there are persistent inequalities between the urban regions and the rural ones, in terms of education level and access to services, and the macroeconomic and climate shocks enhance more the vulnerability of persons who do not have a good material situation.    

“The increase in remittances is slowing down, and the state cannot afford an increase in pensions,” a World Bank chief economist, one of the main authors of the study Maria Eugenia Davalos said. “Thus, in the long run, the improvement of the living standards should be generated by jobs.”  

The recommendations proposed within the surveys include consolidation of the labour market, approaching corruption in the business environment, development of agricultural and non-agricultural activities in the rural environment and improvement of the coverage of the social insurances system and allocations for heating.   

“The consolidation of the means of existence of small farmers is extremely important, as the agricultural sector continues to provide 30 per cent of the labour force employment and another 24 per cent in agricultural activities of low intensity,” WB Country Director for Moldova Alexander Kremer said. “Given that most small farmers are not involved in trade activities, then urbanization, connectivity and employment outside the agricultural economies represent the best options for getting out of the crisis.”    

Earlier surveys on poverty and equity in Moldova show similar challenges to the ones tackled in the present report.

(Reporter V. Bercu, editor A. Raileanu)