The National Statistics Office (INEI) in Peru collects annual household surveys which are used to produce poverty estimates. This is done via the Encuesta Nacional de Hogares (ENAHO) which has been in place since 1995. As a result of various methodological and implementation changes in the survey instrument and data collection practices, the non-response rate has been increasing since 2004. This introduced a serious delay in publishing updated official poverty numbers in Peru since 2004 as there was not a consensus on what the best methodology was to correct this.
In response to a request from INEI to provide technical assistance to solve these issues, a World Bank team led and organized an external Advisory Committee whose role was to: (i) discuss and recommend a methodology to produce comparable poverty estimates for 2004-2006; (ii) oversee the work of an inter-institutional technical team who implemented the recommendations (composed by INEI, WB and others); and (iii) propose a concrete plan of action to avoid similar problems in the future. The Committee was composed by experts on poverty issues from the public sector (Ministry of Economics and Finance and Central Bank), local academia (Universidad Catolica, Universidad del Pacifico, GRADE, Universidad San Martin), the IRD, the World Bank and the IDB. In addition to the technical support, a key objective of this inter-institutional approach was to help INEI in creating an environment of openness and transparency which was necessary to improve its credibility and relationship with its clients.
The advisory committee met two times to oversee the process and a consensus was reached by the committee on both the technical solutions as well as how to move forward with future poverty calculation methodologies. A formal event organized jointly by the INEI and the WB announced on July 19, 2007 the new poverty figures for 2004-2006 that were estimated using the agreed methodology.
The new results suggest that poverty has decreased significantly (by about 4 percentage points) over the last 3 years to 44.5%. Nonetheless, much of this change is driven by poverty decreases in urban areas (especially Lima). As such, while the overall reductions are positive news, these results raise concerns about rural poverty.
The success of this exercise has now created the space to institutionalize similar processes in the future that can serve both as conduits to minimize unnecessary political pressures to INEI as well as providing on-time analytical support. The World Bank will continue its technical assistance support to improve poverty measure methodologies in Peru and maintain the Advisory Committee as an external quality control entity for INEI.