Belarus - Poverty Assessment: Can Poverty Reduction and Access to Services Be Sustained?

Abstract

Building on the strong poverty analysis conducted by the government for almost a decade, this Poverty Assessment offers a number of improvements to the methodology for measuring poverty and living conditions in Belarus and contributes an in-depth analysis of the multiple dimensions of poverty-particularly the non-income dimensions (education and health). The poverty assessment also indicates concrete options for the government to strengthen its poverty reduction strategy. The main findings can be summed up as follows: Poverty has declined over time and is low compared to other transition countries. The gains in poverty reduction are shallow and fragile. A key source of economic vulnerability is administratively-set real wage growth which has outstripped productivity growth, jeopardizing the sustainability of growth and poverty reduction. The reduction of Russian energy subsidies to Belarus further affects enterprises and their ability to invest while sustaining a social subsidy in the form of high wage levels. In a high cost, low flexibility business environment, the ability of the economy to create new jobs remains elusive. It is thus important for Belarus to take the opportunity to analyze the significant underlying risks the economy faces and the uncertainties it poses for poverty reduction and growth. Income inequality has remained relatively low but significant inequalities are emerging in the ability of different groups of households to access education and health services. The performance-enhancing reforms in education, health and social protection which Belarus has embarked on are in the right direction. These reforms need to be deepened, however, in order to generate the efficiency gains (savings) that can be redirected towards addressing equity concerns. Belarus' poverty monitoring and analysis system has potential to be a "good practice" model for the region.