May 10, 2002—Colombia needs to recover sustained economic growth of four percent a year until at least 2010 to reduce poverty to its 1995 level, according to two World Bank studies released earlier this week.

The studies, Colombia Poverty Report, and Colombia Social Safety Net Assessment, analyze data to show that substantial gains of the 1980s and the first half of the 1990s in the struggle against poverty in Colombia have been wiped out by the country's recent economic crisis. They also call for reforms to Colombia's social safety net system to ensure that assistance is available to vulnerable groups, especially during economic crises.

With more than half of Colombians living in poverty in 1999, the study says the proportion of poor had returned to its 1988 level, after having declined by 20 percentage points between 1978 and 1995. During this same period, the extreme poverty rate declined even faster, by 24 percentage points. But its rise in the late 1990's was less severe, and remained below its 1988 level.

The report finds that despite two decades of persistent security deterioration, Colombia experienced improvements in school attainment, infant mortality, child malnutrition, child labor, life expectancy and health insurance coverage.

However, the recent economic slump was worsened by continuing crime and violence, which has devastated the welfare of all Colombians and contributed to the displacement of over one million people during the last decade.

According to the report, the Colombians most vulnerable to poverty are typically children of all ages, dependents of young heads of households with low-to-middle job skills, recent migrants (presumably displaced), and non-homeowners.

The companion Bank study on the social safety net concludes that Colombia's severe economic downturn, even if it has begun to reverse itself, has left poverty and unemployment levels much higher than they were before the crisis. These problems were compounded when the recession reached its lowest point because, "Colombia did not have an effective safety net in place able to address the consequences of the crisis," the World Bank paper says.

Colombia's investments in health and education before the crisis accomplished results such as a 20-year increase in life expectancy, along with high literacy rates and school enrolments. But sustaining these social services, which also include a generous public pension regime, was dependent on high economic growth rates. When the recession hit, the report says, "the social assistance programs that could have been mobilized to provide a safety net during the crisis were limited by a lack of financing, institutional inflexibility, unfocused mandates, and often poor targeting."

Based on its analysis, the World Bank study recommends technical reforms to improve targeting, budgeting, monitoring and evaluation of social assistance programs, as well as initiatives to eliminate overlap among existing programs, upgrade the quality of daycare and nutrition programs for the poor, address the needs of internally displaced people, and help the indigent elderly. Finally, the report calls for a reform of Colombia's longer-term social assistance strategy, with a specific recommendation to increase the social assistance budget from under 0.7 to one percent of GDP through budgetary reallocation and better poverty targeting.

Useful links: Click here to read the full press release. Click here  and here to read the studies. Click here to learn more about the Bank's work in Colombia.