Armenia’s economic growth during the past decade has significantly reduced the incidence of poverty, which fell from around 56 percent in 1999 to about 35 percent in 2004 and 25 percent in 2007. However, Armenia continues to face challenges in maintaining broad-based growth, in resolving regional disparities, and in developing its human capital to meet the opportunities of a global knowledge economy. Although recent growth fostered noticeable improvements, significant pockets of poverty remained. Then in 2008, the country suddenly became vulnerable to the backwash of the global economic crisis—which brought a precipitous drop in revenue for some key exports; an unprecedented dive in remittances from Armenians working abroad, particularly in Russia; and a sharp decline in private capital flows. The government’s capacity to measure and monitor poverty has increased over the years, but further improvements would strengthen its ability to craft informed policy and respond more confidently in times of trouble.
The approach of the World Bank Group in Armenia since 1998 has been to build national capacity in poverty measurement and analysis for evidence-based policy making. The continuity and persistency of that effort over time have steadily deepened the dialogue and made it productive. In 2004 the focus shifted toward implementation of policy and the project was recast as a Programmatic Poverty Assessment. During its decade of operation, it has facilitated discussions about poverty at the central government level, improved resource allocation mechanisms at various administrative levels, collaborated on formation of the national poverty strategy, and provided timely analytical and advisory support. More recently, the World Bank Group has supported the government’s effort to mitigate damage from the global economic crisis and monitor its social impact.
With IDA support since 1998, Armenia has developed the capacity to generate highly detailed annual poverty profiles with only limited technical support from the World Bank Group.
- Stronger capacity. The Programmatic Poverty Assessment (PPA) provided technical assistance to improve collection of accurate and reliable data on households, build local capacity, and provide high-quality poverty analysis and proposals to inform policy making. The National Statistical Service produced regular poverty profiles and played a crucial role in disseminating the results to partners.
- High-quality data for the first time. The Integrated Living Conditions Survey of Armenia is conducted annually with the technical and financial support of IDA and other interested donors.
- Data-informed policy. A high-quality annual household survey is conducted by the National Statistical Service of Armenia. Its data on poverty and other aspects of Armenian life underpin evidence-based government decision-making in social policy, including the design and budgeting of targeted social assistance and free access to health care.
- Mitigation of damage from the global economic crisis. The PPA conducted one of the first and most-detailed poverty impact analyses of how the region was affected by the global economic crisis. Findings were shared with the highest government levels and with representatives of the development and diplomatic communities. This provided timely and important information for World Bank Group activities in Armenia, including IDA fast-track operations.
- Open books for an informed public. Since 2005, a Social Snapshot and Poverty Report has been published annually in Armenian and English and widely disseminated. The data is currently available for analysis.
IDA has provided some US$650,000 over the past 10 years, about two-thirds of it since 2004. The main contribution has been to build capacity for preparing informed poverty surveys and providing sound professional analysis, using technical assistance and training. IDA also attracted additional donor interest in poverty analysis and data collection. The Millennium Challenge Corporation supported the Integrated Living Conditions Survey in collaboration with the World Bank Group.
The World Bank Group continues to support Armenia’s poverty monitoring through improved data collection and measurement. A current priority is undertaking a rapid-response survey to evaluate the social impact of the global economic crisis. The team is also refining the country’s annual Integrated Living Conditions Survey by adding survey modules. For this work to achieve the greatest impact, it needs to continue to gauge the effectiveness of policy responses to identified targets of concern.