The International Monetary Fund (IMF) says government cash transfers for poor and vulnerable households effectively tackled extreme poverty in the first year of the Covid pandemic.
In a working paper released Friday in Washington, the IMF noted that about 710,000 households – 2.8 million people – received money from the Ministry of Social Services, Veterans Affairs and Youth Rehabilitation in 2020.
These subsidies averaged about $45 per month, which corresponded to about 33 percent of monthly household income for the bottom 25 percent. Many have received money until the end of 2020 – six to seven months on average – and parts of the program have been extended until 2021.
Without cash transfers, according to the newspaper, about 17.3% of households would have seen their income fall below the international poverty line of $1.9 per worker per day, compared to 10% before the pandemic.
But “thanks to the transfer, the share of households living below the international poverty line is estimated at only 12.6%,” the newspaper said.
“Additionally, the cash transfer may have lifted 164,000 households out of monetary poverty, compared to the pre-pandemic baseline. Survey data collected during the pandemic confirms this.
“The percentage of households reporting some degree of food insecurity fell from 67% to 36%, between August and October 2020. Most transfers were spent on food and other necessities.
At the same time, however, up to 260,000 households may have fallen below the $1.90 poverty line in 2020, but found themselves uncovered by the cash transfer program.
These “new poor” households – which represent more than half of those estimated to live below the poverty line – are generally urban and work in service industries.
“Urban workers may constitute a new pocket of poverty, more likely to dip into their savings and borrow heavily in the aftermath of the pandemic.”
Overall, the paper concluded that “the cash transfer program has been very successful in tackling forms of extreme poverty that predate the pandemic, by targeting households in the lower deciles of the income distribution” .
“However, many of these households tend to be rural and live off subsistence agriculture,” he said.