Report No. 11191.PE Peru Poverty Assessment and Social Policies and Programs for the Poor May 5, 1993 Human Resources Division Country Department I Latin America and the Caribbean Region FOR OFFICIAL USE ONLY MICROFICHE COPY i Report No.: 11191-PE Type: (SEC) Title: POVERTY ISSUES AND SOCIAL SECT} Author: JONES, T Ext. :35309 Room:I7181 Dept. :LAIHR 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~( P~~~~~~~~~~~~~~~~~~~~ U q. This 40 . ,.has. r.stricted dis.tton afdmay be used.by recip, ---s d y ?c -f Iiek soff .taf duis vt- co, nte,of -oth ewise W'~~~ W * WodBn oi~ati, . W ;~' , , . .. __; .x..- , -- .e~ CURRENCY EQUIVALENTS Currency Unit prior to 1985 Sol SIS.) 1985-1990 Inti (/.) = S/1,000 1991-present New So (S/. = 1/1,000,000 Exchange Rates US*1.00 equivalent (period average) Official Parallel Market 1986 1113.9 1/17.8 1987 1/16.8 1/40.2 1988 1/128.8 1/314.8 1989 1/2,666.2 114,394.9 1990 1/187,885.6 1/206,441.1 1991 October S/0.92 November S/1.02 December S/1.00 1992 January S/0.99 February S10.97 March S/0.96 From August 1990, the exchange rate was unified. FOR OFMCIAL UE ONLY ABSTR4CT 1. The objecdve of this report is to identify the components of a povrty alleviation strategy for Peru, with a focus on socia services. The report analyzes Peru's previous economic performac and the main eements of the reform program which could affect the poor. It also analyzes the characteristics of poverty in Peru. It examines the curret stats of the socia sewices most critcal for the poor, identifying key issues and examining the utilization of services. Ibe repoit makes recommendations on priority programs. Fmally, it looks at issues in the implementation of a poverty alleviation strategy, and it examines the Government's progress thus far in defining its strategy. 2. Peru's potenti was frUste during the decades of heavy Government intervention In economic acdvity. One of the legacies of poor economic pefmae is the persisnc of high poverty levels. In August 1990, a new adminis on announced the first measu in a strong stabilization aa adjusatent progrm. The initation of major economic reforms provides a unique opportuity for Peru to consider a program to alleviate poverty. These economic reforms are laying the groundwork for broad4baed economic growth, a reduced role for the state and greater opportunities for the poor. A targeted povety alleviation program including social services can proect the most vulnerable groups and assist others to take advatage of new opporites. 3. Low spending and poor outcomes characterz Peru's social sectors. Infnt an mater mortality rates arm among the highest in Latin America. Chfld malnutiton peists at 1971 levels. The 1991 cholera epidemic demonstaed in a dmatic way the prcaiousess of sanitaton conditions. In education, Peru performs well in tms of primary and secondary school enrollment, yet reptiion rat are high and educational quality is low. With sharp declines in Government expendiure over the past five years, public resources for socal services have become scarcer. While protected from the extreme reductions experienced in other sectors, social spdiw is lower than in neigboing ries. 4. Health and education sector issues infuence directy the quality of life for the poor. In health, the benefs of Peru's extensive network of primary care facilities are not realized because of a scarcity of equipment, poor distution of pesnnel and a low proportion of total resoces devoted to primary care. Quality and utilization are low. In nutrition, widespread child malntrition has not been reduced significantly trough food assiace. Numerous agencies wortc on nurition but in the absence of an oveal fiamework, adequate norms or surveillance. In education, prepimary schooling quality is poor. Multigrade schoois in rural areas iack supplies and well-trained teachers. Illiteracy persists at a relatively high rate, with little progress in eradicating it among nrual women. This document his a restricted distribution and may be used by recipients only in the performance of their oflicial dutis. Its contents may o otherwis be disclsed without World Bank authotietion. 5. Who are the poor in Peru and how do they use social services? Ts report constructs a poverty pro9fie drawing upon a 1991 Living Standards Survey. Half of all households surveyed are poor and one fiflh are extremely poor. The poor send their children to school later and a larger proportion either never attend school or drop out very early. Fewer of the poor attend pre-pimary schools. The poor are less likely to receive vaccinations, seek media care or have access to public sewerage systems. They are more likely to use primary health cenrs and posts. 6. This report recommends that education programs for the poor improve conditions in rural multigrade schools, provide textbooks and teaching materials and train teachers. More emphasis needs to be placed on preschool education. Non- Spanish speaking women should be trained In functional skills including literacy. Health programs for the poor should concentrate on providing mothers and children with adeuate primary health care services. Supplies of basic equipment, mateials and medicines need to be ensured for primary care services. Prevention and treatment of cholera and improvement of hospital emergency services are other high priorities. Well-designed social compensation programs can complement improved socil services. Employment programs can reduce poverty by providing income and, creating and rehabilitating infrastructure. Food assistance can protect the nuritional status of vulnerable groups. 7. Implementation of a poverty alleviation strategy needs to build in approprlite' targeting and institutional arrangements. In Peru, geography is the single best indicator for reaching the extremely poor. By direcdng resources to thb rum sierra, one in every two extremely poor households can be reached. The magnitude and seriousness of poverty in Peru call for exploring a vaiety of insdtitonal arrangements. Among those worth considering is the social investment fund model. Peru established FONCODES, its National Fund for Social Compesation and Development in August 1991, and by mid-1992, this organizat bega to show encouraging signs of its potential. NMOs should also be called upon to participate actively. They can mobilize and utilize substant levels of resources to reach underserved populations effectively. 8. Ihe Government recendy prepared a poverty alleviation strategy which is generally consistent with the findings and recommendations of this report. The Government strategy recognizes that poverty alleviation demands essentily an economic strategy. It aims to improve the living conditions of the extremely poor through programs in food assistance, health, education and employment generation. Financing for this strategy must come from government and donor resources. To attract sufficient donor resources, the Government must demonstrate its own commitment. In 1990, total government spending on health and education reached only 2.2 percent of GDP. As its revenues increase, it is recommended that the Government increase the resources it allocates to health and education. The challenge and test of the Government's resolve in redre log poverty will be the extent to which current and future policies and programs follow its poverty lleviation.. Contents vii latroduetle ix Summand Cya (English and Spanish) xi aopWt 1: From Emosic ad Soa Crus to Rm 1 cotrodm1on Economi Stanion Economic Cdisis 3 Soca Crids S The Econoic lteform Program 9 Initia Response of the Economy and Expected Benes 12 ConclusIon 12 Chapter 2: Pow"erty b NeI13 Trnds in Povety 1970-1990 13 Povefty rfle 14 Smmary 24 Imicaions for Poverty Aleviaon Stratey 25 ahapter 3: Soca Srvks 27 27 Status of Services 27 ham 28 Wealth mad Nourh 30 Health Condo 30 Status of Sevces 31 Issues ~~~~~~~~~~~~31 NutritIon 32 Child Nutritional Status 32 Micronutrients 33 Nutritional Services 34 Issues 34 Conlusfions 36 Chapter 4: Towards a Poverty AlleviatIon StrateW 37 IJtroductlon 37 Socia Services 37 Education 37 Health 39 Nutrition 41 Socal Compensaion Programs 42 Food Assistance 44 Current Status Magnitude, Agencies and Progrms 44 Major Issues in Food Assistance 47 Major Recoramendations 47 Program Speclftc Issues and ReendaIons 49 Concluion 49 ChapterS: ImplementIng a Poverty AlleviatIon Strate 51 Itoduction 51 Targeting 51 Institutional Arrangements 52 Security Constraints 55 Poverty Alleviation Program of Govemment 55 Concluion 56 ibliogaphy 59 Tables Table 1.1 Performance Indicators of the Economy 3 Table 1.2 Indicators of Economic Crisis 4 Table 1.3 Compl ative Social Indicators in Selected Countries 5 Table 1.4 Struchre of Central Government Spending, 1970-1990 6 Table 1.5 Social Setor Spending, 1970-1990 8 Table 1.6 Coefficients of Vulnerability, 1985-1990 9 Table 1.7 Government Spending on Education and Health 9 Table 2.1 Latin America: Poverty Estimates Around 1970, 1980 and 1986 14 Table 2.2 Distribution of Total Expenditure by Decile: All Sample Areas 15 Table 2.3 1991 Poverty Headcount 16 Table 2.4 Regional Distribution of Population by Poverty Groups 17 Table 2.5 Household Size and Per Capita Consumption by Poverty Group 17 Table 2.6 Sex of Household Head Among the Poor 18 Table 2.7 Distnrbution of the Poor by Langage of Interview 18 Table 2.8 Distnrbution of the Poor by Employer of Head of Household 19 Table 2.9 Food Expenditures by Poverty Group 20 Table 2.10 Food Consumption of Poor Households by Type of Acquisition 20 in Rural Sierra iv Table 2.11 Non-Food Expenditure Pattem by Poverty Group 21 Table 2.12 Public Services for the Poor 22 Table 2.13 Education Level of Household Head 23 Table 2.14 Agricultura Land Owwnship in the Rura Sierra 23 Table 2.15 Crops Grown in the Rua Sia 24 Table 3.1 Wage and Budget Indies 28 Table 3.2 Indicators of Intemal Eficiency of Primary Education 29 Table 3.3 Infant Mortality Rate by Region 1989 30 Table 3.4 Coverage of the Maternal-Child Prom 1989 31 Table 3.5 Intensity of Contacts in the Maternal-Child Progam 1989 31 Table 3.6 Nurses per Doctor 32 Table 3.7 Disea Trends 33 Table 3.8 Changes in Household Foodshare by Region ard Expenditure Levels 34 Table 3.9 Food Consumption ss Percentage of Total Consumption for Lima Households 34 Table 4.1 School Attendance by Age Group and Poverty Level 38 Table 4.2 Kinderaten Attendance by Poverty Group 38 Table 43 Percentage of Children Receiving All Required Vaccinaons 39 Table 4.4 Percentage of Ill Who seek Medical Attention 39 Table 4.5 Drug Purchases by Poverty Level 41 Table 4.6 Unemployed by Poverty Groups 43 Table 4.7 Major Food Assistce Programs, 1991 45 Anexes Annex A Social Security and the Provision of Health Services The Private Provision of Social Semvices Annex B Recent Research on Povety in Peru Annex C Calculation of Poverty Lines Table 1: Poverty Lines for reme Poor and Poor by Region Table 2. Poverty Lnes Relative to Expenditure Distibution and Mlean by Region Table 3: Basic Food Basket for Lima and the Coast of the National Institute for Food and Nutrtion (INAN) Table 4: Basic Food Basket for the Sierra Annex D living Standards Measurement Survey, 1991 (Selected Tables) SlatsicalAppendix v PREFACE This report is based on the ndings of missions which visited Peru in June and September 1991. The missions consisted of The-esa P. Jones (Chief of mission), Eduardo Atalab, Karen Cavanaugh, Ernesto Cuadra, Magaret Grosh, Bruce Herrick and Richard Moore. 'Me section on non-govermenal organizations draws upon a backmund paper by Tbn de Witt based on findings of an April 1991 mission led by Christopher Hennin. 'he section on the poverty profile draws on a background paper written by Gustavo Yamada and a recent Living Standards Measurement Survey conducted and processed by the firm Cuanto. The vnissions would have been unable to prepare the report without the assmance provided by staff of the Ministry of Economy and Finance, the Ministy of Health, the Ministry of Education, the Cetr Reserve Bank, the National Planning Institute, FONCODES and other agencies in Peru. Tbis report benefitted from the Government's review of an earlier version, which was discussed with representatives of the Ministries of EReazh, Education, Economy and Finance, and the Central Reserve Bank in October 1992. Tlese discussions confirmed the Government's agreement with the report's ov. -all conclusions and recommendations. Tbis version has been revised to take into account the Government's recent formulation of its poverty alleviaton strategy. The rport also benefitted from an exceptionally helpful group of peer reviewers within the World Bank, comprised of Paul Glewwe, Margaret Crosh, Phil Musgrove, Larry Wolff and Helen Saxenian Acronyms and Abbreviatons M^CA 6 Id _RwalCanA EO_na FOdASbd fLC APRCL Fomodn4oafUpta4Apcaofin PA DAIZOD DeaurofodslaAgdcukaydeIahfaeshuc- Ag ancRliun and Reo tumftslmdeaZomDepbniu Developwens in DmudAm=as DESCO Centro doe ad6ol y_Picido1Duszolo Cunx forth Stuidy and Ptomtio of Devem wsPM Famb de Bme Social 3o" Emwv7 social Fund (Bo"ivia) PONCODES Famdo NaionadeC_sp yDeamyDnOo NaiuSoci and De"dePmmkd INAN T Natond Nac AlonaldioyNut Ntlnsftu onFeEJigandNutMotb MCIN maternal adMddtldeakh MOE bsodeBdwaci h fEducaam NGO __ OPASA Obia F yAuthciaSocial AvstDvyelqpmwandRaiAgecy vil PRONAA nNAIwddAyo_ NaPoodAs_P PAD Prmg dOAiseDn ef DheIaD4xePa PAHO Pan Am4hb H _ zo PANFAR p oy Nukle Iea IcFamiNa Fading ProgmfbrH4ghRisk Famls enAltoRao PAT-PAMg cotoWoS G sPUmy School 0ildm and TB} PLSS Fem Livivg Stadars Survy PRW;MA PmacosenhftadcSalud,aM y PwjeclnsImunionaSgs PRODA PtoVm dde Darrolo Ingal lJtbo cm Food Aad I ontad Urban MON"d Natonl Food Support Progrn PRONABCE Progam Naconal de Contrl del docby Naionl C3okw and danicism CkdisnoRadmibos aaaSPtmg PRONOEE qdm No Esh de Bdlca ni NlEProgrmm SISVAN S_ste deVIlmolA y N Iuiol Food and Nutitim Surveilace Syslem alDE Uided DepSnaldeSad I k 'I nit WFP Wodd Food Program V]il Introduction 1. In August 1990, in the midst of plummet- advantage of oppaortnes, not only the few able iug output and hypnla on, a new adiniz't- to gamer ecomic rents. Second, the new admin- tion in Peru announced te first measures in a istaion has decided to reduce the role of the Gov- strog stabilization and adjustment program. The ement in economic activity. As the state pulls main tenets of the pgam are tight fiscal and back from many eoomic activities, it will free moneary policy, libalzation of makets and a resources to improve the prwision of public ser- reductin of the previous pervsive role of the vices such as education and health Govemments overnment in the economy. Mhe objectives are to traditionally have an important role in providing restore croeconomic stability on order to pro- these services to the disadvantaged. Third, the mote sustainabe, broad-based growth, thereby re- pmotion of growth would beneit the poor, but it versing Peru's legacyof economic stagnation and will take sone time for the ecomy to respond to deterioation.That legacy is reflected in many eco- the new incertive structe. Also, although sore nomic and social indicato, but pehaps most im- reforms are likely to help the poor, others may lad portaty, in the prsistee of a higb incidence of to tempory losses for some. In addition, certain poverty In cerai regions and ethnic ps, and a groups in the country - those lacking sufficient decras in welfare to below the poverty line for educato and those with poor health, for example may who had not previously been poor. - may not be able to take advantage of emloyment opportu-ni without special assisUce. Ihe needs 2. The initiation and, thus far, impressve of thesegroups should be addressed. implementaion and broadeing of the reforms pwvide a unique opportuniy for the Govement 3. The purpose of this report is to identify the and the agencies providing financial support to components of a poverty alleviadon strategy for Peru to consider the needs of the poor. It is a Pe, focusing on social sevices. Of course, a pro- unque opportunity for three reaso. Fira, inttt- gram to reduce poverty would encompass other national expedence shows that the first prong of an aspects as well such as rural developmen and in- effective stategy to reduce national pet Is the fsuctiemprovemens. However, those areas promotion of broad-based growth, partculaly are not the focus of this document The report be- economic expansion dhat encourages the use of la- gins with a brief analysis of Per's previous eco- bor. For many years the requisie polcies and nomic performance and the main elements of the incentive strucue for growth have been absent reform program, especially those aspects which in Peru. That appears to be changing and qukidy. could have the biggest impact on the poor. The If this program is succesfl in achieving its second chapter analyzes the chaact cs of goals, alare groupf people will be able to take povery m Peru. mhe third chapter exmines the ix curt statu of thsocial sCevi most critidl cpter looks atpissues sh as the for the poc. J te fourth chapter tohe i ldc- t oleof socia ivestment funds and non-govern- floin die dXoion ~of socia vis plus lfor- me Sal ios. a o nes X p mlon on thOe use of ths servces by the poor, are made by the Oovermet In defi a povet al- used as the basis fow recammeng the priority leviaton stategy and in iX dfying proets to programs which need to be supportd by both the spport tiht satg. Govenment an exti asistnce. Th fia ' Summary and Conclusions 1. One of the legacies of poor economic per- groups and assisting others to take advantage of formance in Peru is the peistence of high poverty neww oppouties is calfed for and is the focs of this levels in some regions and ethnc groups and the repot decline in living andards of others. Tho initiation of major economic reforms provides a unique op- 2. The promising potential of Peru was fes- porunity for both the Government and those pro- trated durng three decades of heavy Government v tag financial support to Peru to consider a pro intevention in economic activity which rested in gmm to alleviate poverty for several reasons. Fist, a legal structure and policy environment inimical international experience shows that a meaningful to growth. The overexpansion of the state led to a and sustained reduction of poverty is impossible waste of resources and economic stagnation. Be- without broad-based economic growth. Up until cause of the lack of growth and rigid, closed mar- now the macroeconomic stability, administrative kets, few groups in the country had access to the framework and incentive structure conducive to means to improve their livelihoods. Public policies growth were absent in Peru. That is changing and diorted most of the markets in the economy. quicldy. Second, one reason for the poor growth Trde policy relied on an import-substitution stat- was the over-exteion of the slate in economic ac- ey with very high tariffs and many non-tariff bar- tivity. A key element of the reforms is the reduc- rers. Declining tax recipts contibuted to the de- tion of the role of the state. As the public sector terioration of fiscal performance and reduced the moves out of mm where it adversely affected out- resources available for operating, maitaining and comes - labor and financial markets and produc- investing ine al public seices. Even policies tion - it will free resources for areas where it can and progrms established to benefit workers and and should make a positive contribution, namely famners, such as labor stability laws and agrarian the provision of public services such as education refonn, proved to be detrimental to those groups and health. Third, in the medium and long-run the and to the economy. Real wages fell afer 1970 and implementation of the reforms should reduce pov- employment in the fomal sector hrank. Agricul- erty by providing more opportunity for the poor to tore grew at only half the rate of population provid- use their assets, such as labor and land. However, ins little opportunity for an improvement in rurl in the short-run some measures may lead to tempo- incomes. rary difficulties. It will also take time for the economy to respond to liberalization and some 3. President Garcia's explanation of cbronic groups are not able to participate fully. A targeted inflation and low growth was that Pem was in a poverty alleviation progm, including social ser- "debt trap":servicing the external debt would ac- vices, and aimed at protecting the most vulnerable celetaft' devaluation and inflation, erode domestic xi savings, and curtail investment. Consequently, his Government's ability to provide basic services in administration (1985-90) put a ceiling on foreign the long-run. Growth in urban employment and debt service of 10 percent of the value of exports, wages is a major determinant of the pace of pov- and later stopped payments altogether. It instituted erty reduction both through its direct influence on widespread foreign exchange controls and in- the exng wban poor and through the opportuni- creased protection. The Government also raised ties it creates for migration from rural areas. the minimum wage, expanded credit and subsidies, Greater neutrality in the trade regime can support a decreased the value added tax rate and lowered more labor-intensive pattern of industrial expan- public sector prices. This strategy led to a high fis- sion in import-competing as well as exporting sec- cal deficit, financed by money creation. After 1987 tors. The Government has moved quickly and the market lost confidence, inflation rebounded boldly to liberalize the trade regime. However, and economic output and real wages declined trade reform is most effective if factors of produc- sharply. Economic mism ment reached a cli- tion are free to respond to market forces. In the max in 1989-90 and was reflected in hyperinfation. case of Peru, state policies since the 1960's have severely restricted factor movements. In order to 4. The poor economic record is one factor promote more opportunities for urban employ- behind the poor health conditions in Peru. Among ment, a key area for reform is labor market deregu- countries in the region, Peru ranks near the bottom lation. Policies to promote rual development also on health indicators. The 1991 cholera epidemic are an important component of the poverty allevia- demonstrated in a dramatic way the precariousness tion strategy. of sanitary conditions nationwide. In education, however, it ranks near the top on the ratio of stu- 6. Growth is important, but is not the sole dents enrolled in primary and secondary schools component of the poverty alleviation strategy. Pro- although high repetition rates and low quality are grams are needed to ensure that the poor can take issues. The public resources available for social advantage of job opportunities and to protect some services have become scarcer with the sharp de- vulnerable groups that are not able to participate dine in overall Government expenditures during fully in the economy. In order to design these pro- the last five years The decline is explained by sev- grams information on the poor is needed. The pov- cral factors including the severe recession and the erty profile of Peru constructed in this report is near vanishing of the country's tax system. The based on datafroma Uving Standards Survey car- social sectors were protected from the more ex- ded out during October/November 1991. Two treme reductions experienced in other parts of the poverty lines are calculated. Households are classi- Government. Nevertheless, because of the decline fled as extremely poor if their total expenditures in tot resource availabilit, Peru generally spends are less than the cost of a basic food basket. less than its neighbors in ese ar Households are classified as poor if their total ex- penditures are less than the cost of a basic food 5. In August 1990, the Fujimori administra- basket plus an estimate of non-food expenditures. tion launched an orthodox and sweeping stabiliza- About half of the population surveyed fal below tion and structul reform program. During the the higher of the two poverty lines and a fifth fail fir stage, the Government took dramatic steps to- below the lower cutoff. wards stabilizing the economy and rebuilding ties with the international financial community. A sec- 7. Where do the poor live? Among the four ond stage of policy reform began in March 1991 regions sampled (lima, urban coast, and urban and and was based on a series of broadxsed stctural mral sierra), the incidence of poverty is highest in measures. These reforms aimed at promoting com- the rual sierra. Two-thirds of the households there petitiveness and deregulating economic activity. are poor and 47 percent are extremely poor. Only Several reforms are crucial for poverty reduction. 10 percent of the households in Lima are ex- Peru's ability to reverse the sharp decline in tax tremely poor, compared to about 20 percent in revenues lies at the heart of the restoration of fiscal both the urban coast and sierra regions. In each of balance. It is also vital in order to guaratee the these three regions the share of poor households is xli about half. The rural sierra is estimated to contain 12. Among land-owning houeholds, the the largest number of extremely poor (1.6 mfllion poor have roughly 50 percent less land than the people). Because of its size Lima contains the non-poor. About a third of poor households own highest number of poor (2.5 million people). irrigated land, compared to about half for the non- poor. Poorer households in the rural sierra tend to 8. The typical poor person lives in a larger have more workers engaged in agnculture than is household than the non-poor, on averge contain- the case for better-off households. The most im- ing 1.5 more individuals. Each worker in a poor portant crops produced in the rural sierra by the household supports four family members. For the poor are potatoes, barley and wheat The crops non-poor the number falls to three. Per capita food which are produced mainly by the poor are white expenditures in an extremely poor household are maize, barley, potato, oca and olluco. only 40 percent what it is in other households and the similar ao for total expenditures is 30 pecet 13. The poverty profile provides broad guid- ance on a poverty alleviation strategy for Peru. 9. Only in Lima are female-headed house- Jiaty, targeted programs should focus on the ex- holds found disproportionately among the poor. trem poor which represented a fifth of the popula- Indigenous populations are dad in Peru. tion surveyed. Second, prograns to alleviate pov- Taken together, households headed by Quechua erty among the extremely poor should target the and Aymara speakers account for 40 percent of the rural sierra and the indigenous population. Im- extremely poor and about a quarter of the poor. In provements in access to public services, particu- Lima, migrants are slightly more likely than non- lady for ducation, are needed to reduce extreme migrants to be founJ among the poor. The poor are poverty. These households are at greater risk for found largely among two occupational groupings, poor health because they lack dean water and sam- the self-employed and private sector workes tation facilities. Third, working in agriculture is positively associated with poverty. There may be 10. The food commodities accounting for the potential for agricultural policies to reduce pov- largest share of expenditures among the poor are erty, such as reforms related to land titling, the re- rice, bread, sugar, tubers and meat. The most im- habilitation or construction of small-scale irriga- portant products which are consumed from own tion works, and measures to increase the produc- production are tubers, followed by meat and veg- tivity of the crops most important to the poor. etables. The most impont non-food expenditures Other poverty reduction meaes are unrelated to are detergents, public transporation, soap and agriculture. For example, these households would clothing. Although the poor stand to benefit from benefit from opportunities for non-farm work. any price decreases in these commodites and ser- Fourth, the poor (as opposed to the extremely vices rewting from deregulation and trade liberal- poor) have relatively good access to public ser- ization, there is no product or service for which a vices. These households are poor because they are subsidy would be well targeted toward the poor. either in low-paying, low-productivity jobs in the private or informal sector or unemployed. They 11. Slightly over half of extremely poor need more productive jobs to raise their expendi- households have access to a public water systoem, tures above the poverty level and they are rela- compared to 80 percent for the total sample. The tively well-equipped to take advantage of employ- extremely poor who have access to a public water men opportunities. The execution of the economic system have been more affected by cutbacks in reform program and liberalization of the labor supply than others. Fewer than 30 percent of the market are what is most important to reduce extr.'nely poor have public sewerage semrice, poverty for this group. PfMh, the poor would ben- compared to slightly over 60 percent for the total efit from declines in the price of wheat, rice and sample. Education levels are strongly related to sugar. They would also gain from the elimination poverty. Heads of households with less than com- of the ban on second-hand clothing imports and plete secondary schooling are more likely to be lower prices for detergent and soap. Finally, the found among the poor. Government should reconsider its surcharge zili scheme on agricultmal products. With the excep- the intensity and quality of services is inadequate. tion of dairy products, the scheme either hurts the The composition of professional skills is not opti- por (sugar, nce, wheat products) or benefits bet- mal, mainly because the ratio of nurses/doctor and ter-off farmers (yellow maze and sorghum) nurses/population is too low. There is also worri- some evidence of low utilization of primary health 14. Socal services can play an impotant dual care services. This low utilization is likely to be role in alleviating poverty. First, improvements in due largely to the lack of effective supply. Part of health, nutrition, and education diecty address the the explanation may be user perceptions of limited worst consequences of being poor. Second, there is value because of poorly traied staff and lack of ample evidence that investing in human capital, equipment, supplies, etc. in health facilities. especially in education, attacks some of the most important causes of poverty. The progmms which 17. In nutrition, Peru suffers from relatively have the greatest impact on the poor are primary higb rates of malnourished children and low-birth education and basic health care. weight babies. Food security generally has de- clined for the poorest. The significant increases in 15. In education, there has been an imptes- the incidence of acute diarrheal disease and acute sive expansion in priy enrollments in Peru. respiratory illnesses also suggests greawe precari- However this was coupled with a decline in expen- ousness in living conditions, decreased effective- ditureslstudent and an exodus of trained teachers ness of preventive health measues and the incmeas- from the system. Interal efficiency is low. Repeti- ingly vulnerable nutritional status of the popula- tion rates are high, particularly in the early grades. tion. Micronutrient deficiencies are common in Students spend an average of 13 years in each some areas of the country. A national survey in grade so that by grade 6 almost three-quarters are 1986/87 esfimated that goiter is endemic in 88 per- overage. On average, for each graduate the system cent of communities in the sierra and selva. Small- spends resources equivalent to 8.4 years of school- scale studies indicate that anemia is a public heath ig, 40 percent more than what would be necessary care problem among pregnant and lactating in the absence of repetition and prematre leaving. women and children. Ihe response to malnutrition One problem is the poor quality of pre-primary has excessively relied on food assistance and given education. In addition, there are wide disparities in insufficient attention to complementary health educational attainment and efficiency within the measres, micronutrient supplemenion, and the country. The lack of supplies and poor teaching promotion of better health and nurition practices, practices are a patcular problem in multigrade including breast-feeding, and child growth and de- schools in rural areas. Aother concern is the per- velopment monitoring. The Child Growth and De- sistence of a relatively high rate of illiteracy as velopment Program of the Ministy of Health has little progress has been made in eradicating it in comprehensive and well-founded objectives, but rur areas and among women. As a consequence, not the budget or activities to achieve them. Other the number of illiterates increased by 1.5 percent problems are poor coordination among the between 1980 and 1986. plethora of agencies active in nutrition, a lack of an overall framework for nutrition interventions, the 16. In health, in spite of an expansion in pri- absence of norms and guidelines and weak nutri- mary care infrstrue, Peru has some of the tion surveillance. worst indicators on the continent, particularly in rural areas. The infant and maternal mortality rates 18. How do the poor make use of social ser- are among the highest in Latin America, particu- vices in Peru? Poverty influences school atten- laMy for the poor. Many health problems could be dance in two ways. First children of poor families improved with more concered efforts in primary begin attending school at a later age than children health care. The full benefits of the network of pri- of non-poor families; second, a larger proportion mary care facilities are not being realized because of children of poorest families never attend school of a scarcity of equipment, poor distribution of or drop out very early. One of the factors behind personnel and a low portion of expenditures spent the relatively high repetition rates for children on the progm. There are gaps in coverage and from poorer households is lower attendance at xlv kindergarten. Altendance rates for female students to purchase drugs, particularly in the sierra. The are lower than for male students among the ex- lack of access to a public sewerage system is tremely poor and among all households in the rual dearly related to problems of diarrhea among chil- sierra dren. While only 17 percent of households lack sewerage facilities, they account for 35 percent of 19. In a program to alleviate poverty the first child diarrea casesm priority for education is to increase the interal ef- ficiency of schools in poor areas. Impwving condi- 21. Programs for the poor should concentrate tions in rural multigrade schools would particu- on providing mothers and youW chidren with ad- larly benefit the poor. Second, a progam to pro- equate primay health care. It is important to im- vide textbooks and teaching materials and to train prove the supply of basic equipment, materials and teachers can improve the quality of teaching in medicines necessary for carrying out these activi- other types of schools in poor areas, increase stu- ties, particllarly in poor areas. Cbolera prevention dent time dedicated to school work and provide and treatment is a second priority and the thd pri- them with more relevant learning experiences. ority would be to strengthen hospital emergency Third, more emphasis needs to be placed on pre- service. school education. Steps need to be taken to im- prove the preparation of children for school in the 22. Even with improved social services, in the PRONOEI and Government-run kindergartens and short-run some groups may remain vulnerable be- to promote greater awareness of the value of kin- cause they are already living on the edge - for ex- dergarten among the poor. One way to atract ample, households lacking employed workers or poorer students would be to offer school feeding whose heads can only find low-productivity jobs programs at this level in some localities. Fourth a in household services or agriculture. For these program to teach non-Spaish speaking women people well-designed social compensation pro- functional skills including literacy should be part grams could complement the two main elements in of poverty alleviation effors Progams to reduce the poverty alleviation strategy - promotion of illiteracy in this group must consider that they are broad-based growth and improved and more equi- widely dispersed and thus hard to reach and that tably distributed social services. their free time is minimal. Experience from other countries suggests using NGOs. Tey have the ca- 23. Employment progams can reduce poverty pacity to reach deprived areas and to incorporate by providing employment (and thus inwme) to literacy programs into ongoing activities, thereby those in need and can generate additional benefits reducing costs. through the rebabilitation and creation of infra- stutre. Since poor people are wflling to work for 20. In health, the coverage of vaccinations a relatively low wage these programs can be cost- among children is low, particulary among the effective. The impact of an employment program poor and in the rural sierra. In general, about half on poverty will be greater if unemployed-headed of all ill people seek medical care. Among the ex- households are found to agreater extent among the tremely poor, this drops to about one in three. The poor than among other groups and if the project gap between the poor and the nonpoor is paticu- improves infrarctu or facilities used by the laMy large in the sierm Where are the poor likely poor. In Peru, about two-tbirds of the households to go for care when they are i and whom are they headed by uwmployed are poor and 30 percent are likely to consult? The poor are more likely than the extremely poor. However, households headed by non-poor to use health centers and poss, as well as an unemployed person represent a small number of pharmacies. Nevertheless, the highest proporkion the poor, generally 3-4 percent In the urban coast of the poor (30 percent) use hospitals. The poor are and sierra the proportion of the extremely poor is more likely to consult paramedics, pharmacists somewhat higher - 6-8 percent. It is important that and traditional healers than the rest of the popula- these programs be cost-effective. The persons em- tion. But across all expenditure levels the main ployed by a temporary employment program source of medical consultations are health profes- should be poor. This can most easily be accom- sionals. Extremely poor households are less likely plished if the wage rate is set sufficiently low that xv that persons with higher paying (and higher pro- derstanding of the nutrient gaps of participants. ductivity) alternatives are not tempted to leave Food assistance coverage among patients with them. The wage rate ensures that an automatic chronic diseases, especially tuberculosis, is inad- self-selection will occur. The average wage rate equate and needs to be increased. The coverage of recommended for any emergency employment the school feeding program should be concentrated progam in Peru is the legal minimum rate. An- on a smaller number of children and assistance other design feature that would promote cost-ef- should be increased to levels which will have a fectiveness would be the locally demand-driven positive impact on absenteeism and desertion. selection and administation of projects. 26. Two issues which arise in the implements- 24. Poor households spend an average of two- tion of the poverty alleviation strategy are target- thirds of their expenditures on food, and those in ing and institutional arangements. Targeting seeks the rural sierra spend three-fourths on food. Thus to distribute transfers or other benefits only to protecting the food security of the poor is a useful those identified as the beneficiary group in the in- way of protecting living standards. Food assistance terest of efficiency. The administrative mechanism can also protect the nutritional status of vulnerable must not cost so much to operate that it effectively groups such as pregnant and lactating women, absorbs the savings from excluding the non-needy. young children and the sick and the elderly. Food In Peru, geography is the indicator with the greatst assistance is a significant resource for the social value as a targeting mechanism. By directing re- sectors. In 1991 donor food assistance resources sources to the rral siea, one in every two extremely totaled at least $150 million. Food assistance poor households in the country can be reached. programs provided over 226,000 metric tons of food to at least 9 million beneficiaries. Food assis- 27. Some characteristics closely associated tance to the urban poor is widespread and substan- with poverty suggest the types of assistance which tial in Lima. Transfers in cash and goods (includ- would mainly benefit the poor. Nearly all house- ing food assistance) from non-profit organizations holds which draw their water from wells are poor. represent on average one fourth of total expendi- Other housing characteristics closely associated tures in extremely poor households and almost ten with poverty include the use of latrines and the ab- percent of expenditures for poor households in sence of household lighting or sanitation facilities. Lima. However, in other areas these transfers aount for a negligible percentage of household 28. Peru seems to be an appropriate environ- expenditures of the poor. The fact that food ment for a social investment fund. Experience with assistance does not reach the rural poor suggests social funds in other countries indicates that effec- that other mechanisms should be explored, such as tiveness depends primarily on the capacity to se- food coupons. Food assistance appears to be lect the right projects, which in turn depends on the relatively well targeted to the poor in Iima; among quality of staff and their independence from politi- the non-poor only 6.5 percent benefit, compared to cal pressures. In August 1991 the Peruvian Gov- three-quarters of the extremely poor households ernment established a social investment fund, the and nearly 40 percent of the poor. Outside Lima, National Fund for Social Compensation and however, more than 40 percent of food assistance Development (FONCODES). Progress in making beneficiaries are from the non-poor. FONCODES operational was slow and initially the 25. The most nutritionally vulnerable groups confusion overwhether the agency was going tobea are pregnant and lactating women and pre-school "demand-driven" or a "top-downe operation ad- aged children, particularly those under the age of veisely affected the quality of some projects. How- 2. The coverage of direct food assistance to moth- ever, in mid-1992 performance began to improve. ers and children appears adequate, but the low lev- els of assistance provided to most beneficiaries and 29. The Regional Compensation Fund which the absence of complementary nutrition promotion is operated within the Peruvian budget has the po- and health care activities makes it unlikely that tential to contnbute to a poverty alleviation strat- they have a significant impact on nutritional status. egy. However, currently no attempt is made to di- Also, beneficiary rations are not based on an un- rect more resources to poorer areas. A change in xvi the allocation fomala would only be feasible and 33. There are two sources of financing for the meaning with higher tax revenues and fic poverty alleviation stategy, govemnment and do- stabilization. nos In order to attract sufficient donor resources the Government must demonstate clearly its owt 30. The magnitude and seriousness of the commitment to poverty alleviation. In 1990 it is povety in Peru call for the active participation of estimated that total govemment spending onhealth all esources, including Non-Governmetl Orga- and education reached only 2.2 percent of GDP in nizations (NGOs) They have several strengths. Peru. As tax reform and the measures to strengthen They can mobilize and utilize substantial levels of tax administration improve revenue generation, it resoures They are also able to reach undererved is rcommended that the Government endeavor to populations effectively. NMOs are a strong con- increase the resources allocated to health and edu- stituency for the promotion of poverty alleviation cation. Spending on education and health of about goals and progm here are many NGQs in Peru 4 percent of GDP is the average for Latin America coveing diffient fields and eas of the counry. and about the level that was spent in Peru during the first half of the 1970s. 31. NGOs also bave some weaknesses. They are often vulnerable to donor influence and have 34. The Government of Peru has taken an im- difficulty formulating policy proposas. Collabora- portant step to reduce poverty. Over the medium to tion with the Govemment is constrained by real long-run what is needed to alleviate the high levels and perceived barries The dispersion of Govern- of poverty is broad-based growth That is the ob- ment responsibilities over a broad range of state jective of the stabilization and adjustment pro- gencies makes NGO eny difficult. Also NGOs grm. However, this is not enough to alleviate differ as to their mangement and adnistrative poverty, particulary in the short-rtn Measures are capacities. Some Government agencies view needed to protect vulnerable groups and to ensure NOOs as competitos instead of potenial execut- that the poor are able to take advantage of the ing agencies. Mistrst hinders collaboration. The greater opportunities in the reformed economy. In Giovernment should establish clear and efficient order to address these latter needs, this report has mechamn for NO cMollaoatio mng NGO examined the profile of the poor in Peru and rec- consorta provide one mechanism which should be ommended priority policies and progms targeted explored for fostering greater coordination, dia- to them. The Oovernment has made a start in this logue and joint plannin with the Government. area. Its poverty alleviation strategy sets clear and aoprit priorities and goals for poverty reduc- 32. The Government ecently prepared a pov- tion efforts within a fiamework of a continuation erty alleviation strategy. The purpose of the docu- of economic policies that would maintain macro- ment is to set the pricrities fora poveny alleviation ecnomic stability and promote gowth. The chal- program in Per. It is generally consistent with the lenge and test of the Govemment's resolve will be fidngs and recoendatons of the analysis con- to what extent cutrent and future policies and pro- tamed in this repot The stratea reogizes that grams are governed by that strategy. The recent the allevation of poverty in Peru demands essen- improvement in PONCODES is an encouraging tially an economic strategy. The objective is to sign. But in order to ensure that the poor reap the improve the living conditions of the extremely benefits of adjustment, the Government should poor tbrougb spm in the areas of food assis- strengthen the social services most critical for lance, health, education and employment genera- them and provide more effective safety nets for the tion precs most vulnerable. xvii PERM. Socia Seito Cmuponeas fer Poverty Aflwlatloa Sb*at Low attendane rates for poor Offer school leeding programsi in Sdw eoeFuftn Prf*a children, partculary in the rura these areas Sieram Maaingade Sdwoo Project Highl epetiton rate, pdatiulary for Inceas the Internal efficiency of MiVJ*lrd $dwdo Projea* fth poo and in rural aesschools in poor areas, in particular by Improving conditions In rural Textook PM*jct mutgaeschools. Provision of textbooks; training mafteras, and teacher training geared to the reqirmetsof muligrad. schools and for other schools in poor -waa urban and rural areas& Improve quality and attendance, in &Strengateig IWPre nWy pre.scoo program. Improve Educati Series Pr*jct preparation of chidren for school in the PRONOIT and Govefnment-r persistent r higllitry rate among Support a program to teach them LMteCa Projec non-Spanish speaking woume basic functional skills, ielying on N100s. Qualit of car for vulneable grops - Provide pre-natal anti-Otetnus mothrs and hiuldren - Is low, imunizton and hron uplements, prticully in terms of the mber of monitor weiSgt gain and provide food contacts supplement, if needed, and trie personne for high-risk deliveries. Train birth attendants for low-risk deliveries. Inrease the covaeage and ftequeny Chid Growth and of community- based growt Developmet Program "R) moitrig,partiuary amon chiodren under two. l dest. in Italcs refr to projerpvUafle proposed by the Gownwwu.m hoge in iardrwd pim refer to dng Gatea pGeiwprogra cL. xiI PEU: Socl Sector Copoeut for Poverty Aleviion Staiq Smnmay Table Jasuesddh Gormalogrm Declining and low coverage of Effors should be made to increase Child Growth and vaccinations for chdken under one the vaccinaion coverag for children Development Proram (MOE) under one hruwgh heaflt faciitie Low coverage of family plann Stroengthn family planning educai p as and incrs access to contraceptive. Low utlaton of prma health cme Rehabilitate deterioraed faoilites ma &R8*0*89 PbMWY Cnm services by the poor, partularly In improve the supply of basie Bsc He and MNuAm the siera equipment and drugs in hoalth facilides. Poor ditrbution of professionl Examine management and incentive Hma Resore resources. There are not enough healfth isaus for staff. Upgade staff housg Devkpn fAre profssionals in the least-developed for pnmary health care facilides. EJlru, Po" regions nor ough wkg in primary health care. There are not Promote greater us of local Basic HMMt and NMwo enough nurses rsoues troupg the provision of tainig for nonprofesionals for example. Since poor households have lower Promote low-co systems for water Lad, and Edaadon in accoss to public water and sewerage supply and sanitation. Where no Sankado systems, their childrean are more likely sanitation facilites exist, latrnes to suffer from diarwhea should be built. Cholera is a serious health problem Strengthen education campaips, Lats and Educaon in that affts parily the poor ensure availability of supplies to treat Sadn wj acueases, and rehabilitate water systems and intl latines. in some areas, a substantial proporton Strengthen hospital emergency of the poor use hospital services services in poor areas Absence of norms and sndards for Tne Government should develop and nutrition interventons monitor compliance with sandards in three key areas: O unit costs for intervention; (i) food assistance programming practices; and (i) information collection and impact evauation. No agency of the Government is The Government shoult assign this responible for mobiliing resources fucion to the Ministry of Health. *Il in itaics refer to proct pres proposed by dw Govenmeant hose in sndwd ptn refer to exisfnS Govwnmew prrmr. xx~. PERU: Soda Sector Componet for Povet Afevim Stratey -y Tab I ssues Reconumendatim Govenment Prorm' Lack of a sysem for nutrition Small sentiDe populaton suveilance on a naional level represontave of importnt taget groups should be monitored. Absence of a framework for nutriton Government should implement inteention leads to duplicafion of nutrition pla functions, a lack of attention to acheving major improvements in nutrit status alid less than optimal resource use Pattern of growth tring amoong EC campaign should be developed to Child Growth and childen during weaing period promote ppropriate waning Development Program (MO)D prctios. Goiter is endemic in a8 pereut Of Goverment should conider National Pogram to Control communides in the sierra and selva. subsidizing the incerase in production Goiter and Endemic Cretinim Anemia is also a public health problem costs of iodized salt aad involve small (PRONABCE) as is vitamin A deficiency produetion facilities which market salt from natura sources. Iron supplementation for pregnant women; semi-anal vitamin A distribution for children. Food As e Food assistance does not reach The Governument should examine Vaso de Leche important target groups among the alterna mchasms to reacb these poor, particularly households in the groups such as food coupons and rural sierra where food security has introduce pilot program. The Vaso de declined. Also, the largest proportion Leche program should strengthen the of beneficiaries of the Vaso de Leche quality of management and control. program are school-aged children. Nearly 20 percent of its beneficiaries Food asdssnce to mothers and PANFAR are not poor. children should be expanded. Some commodities in food assistance The least expensive sources if programs are not the least expensive nutrients acceptable to benefi.;aries sources of nutrients, for example, milk should be selected as commodities. in the Vaso de Leche program Also staple foods used in assistanc programs should be fortified with iron. r r*ae. in ltalics refer to project profiles proposed by the Gowrment. hose in standard print refer to wxisng Gowernmnt programs. xzci PERU: Soca Sector Componeb for Povr AblviaUon Strate -UMM Table Jmes GovermenProam Impact of food assstance on Beoficiary raions should be based nuridonal status is likely to be on an undersanding of the nutrient negligibl, gaps of participants. Food asistance needs to be PANFAR acompanied by complementay healh and nutrition ducation measures, Including breast-feeding and child growth and dovelopment monitouing. La Escola Defiende La Vida does not Program should rt chidren in La BEcuela Defiende La Vida reach poores and most vulonerable and grades 1.4 and those in pow areas, has mi nutriional impact instead of concetratg in I3ma. Prgram should onsmr otnuity i feeding. Employmnt Program How to ensure that program reaches Program should be designed to FONCODES poor while meeting poverty alleviation encourage self-selection by the poor. objctdves with minimum While less than the tinimum wage administrative coat would improv targeting, it has some disadvanaWs. Povrty alleviadon objectives may not be met and the participation of pdvate contractors would be discouraged. For thos reasons, the minimum wage should be offered. Codsderation should also be given to geographica targeting. Adminstration of employment Demand-driven and promotion of the FONCODES programs use of private conactors. * Males in Italcs rfr to project profies proposed by die Govermwn Those n sard prpnt rer to edsLng Goewnentprogranm. xxii Resumen y conclusones 1. Uno de los legados del pobre dosempftio econdmico del Perd es la persistencia de eledos niveles de pobreza en alguras regiones y grupos tnicos, y la dismlnucidn de los niveles de vida de otros. For varias razones, la inlroduccidn de importantes reformas ocondmicas ofre una oportunidad niuca tanto al Goblerno como a quienes proporcionan apoyo financieto al Perd pars consider un programa de allvio de la pobreza. Primero, la experiencia internacondl muestra quo es imposible lograr una reduccl6n significativa y duradera de la pobreza sin un crecimiento econ6mico de base amplia. Hasta ahora en el Perd no exstfan la estabilidad macroecon6mica, el marco administrativo l la estcra de incenos que conducen al crecimiento. Esta situacion esta cambiando, y con rapidez. Segundo, una de las razones del escaso crecimiento registrado era la participacion excesiva del Estado en la actividad econdmica. Un elemento dave de las rformas es la reduccidn del papel del Estado. A medida que el sector pdblico se redre de los soctres en que su intervencidn afectaba negativamento los resultados -trabajo, mercados flncieros y produccion-, liberara recursos para otras eras en que puede y debe hacer un aporte positivo, a saber, la prestacidn de serviclos pdiblcos tales como educacion y salud. Tercero, en el mediano y largo plazo, la aplicacid de las reformas deberfa reducir la pobreza al ofrecer mas oporxnidades a los pobres para utilizar so activos, como la mano de obra y las tierras. Sin embargo, en el corto plazo es posible quo algunas de las medidas que se apliquen ocasionen dificultades transitorlas. Tambien le tomara tiempo a la economfa responder a la liber;izaci6n de los mercados, y algunos grupos no estan en condiciones do participar plenamente. Se requiere aplicar un programa de alivio de la pobreza - tema central del presento informe- dirigido a grupos especfficos, con incluslon de servicios sociales, destinado a proteger a los grupos mis vulnerables y brindar asistencia a otros, a fin de que puedan aprovechar las nuevas oportunidades que se presenten y este es el tema central de este informe. 2. Las posibilidades prometedoras quo tenfa el Perl se vieron fnstadas durante treinta afilos de fuerte intervencion estatal en la actividad economica, que se tradujo en la institucion de una estructura jurfdics y un entorno en materia de polfticas que eran incompatibles con el crecimiento. El crecimiento excesivo del Estado condujo a un despilfarro de recursos y al estancamiento econ6mico. Debido a la fWta de crecimiento y a la existencia de mercados rfgidos y corrados, muy pocos grupos del pafts tendan acceso a los elementos necesarios para mejorar sus medios de vida. Las polfticas pdblicas distorsionaron casi todos los mercados de la economfa. La polftica comercial se fundamentaba en una estrategia de sustitucion de importaciones, con elevados aranceles y muchas barrens no arancelarias. La disminucidn de la recaudaci6n de impuestos contribuyd al deterioro del desempeho fiscal y redujo la disponibilidad de recursos para el funcionamiento y mantenimiento de los servicios pdblicos esenciales, y la inversion en los mismos. Incluso las polfticas y programas que se establecieron para beneficiar a los trabajadores y agricultores, como las leyes de estabilidad laboral y la reforma agraria, resultaron pejudiclales para esos grupos y para la economia. Los salarlos reales cayeron despuds de 1970 y disminuy6 el empleo en el sector fonnal. El sector agrfcola creci6 tan sdlo a la mitad de la tasa de auirento de la poblacidn, brindando muy pocas oportunidades ara que mejoraran los ingresos de la poblacidn rural. 3. La explicacin que dio el Presidente Garcfa de la situacion de Inflaci6n crdnica y lento crecimiento era quo el Perd se encontraba atapado en la wtrapa de la deudae: el servicio de la deuda extrna acelerarfa It devaluacidn y Ia inflaci6n, acabarta con el ahorro interno y reducirfa la Inversi6n. En consecencla, su Goblerno (1985-90) establecid un tope para el servicio de la deuda externa, ijindolo on el 10% del valor de las exportaciones, y mis adelante suspendid totalmente los pagos, Impuso amplios -controles cambiarios y aumento el proteccionismo. Asimismo, el Gobierno aumento el salario mflimo, el credito y las subvenciones, redujo la tam del impuesto al valor agregado y dispuso una rebaja de los precios del sector piblico. Esta estrategia provoco un elevado deficit fiscal, quo se financi con la creacion de dinero. A partir de 1987 el mercado perdio conflanza, se produjo un rebrote inflacionario y el producto de la economfa y los salarios reales disminuyeron drusticamente. La desacertada gestion econdmica alcanz6 el punto culminante en el perbodo 1989-90 y se reflejd en la biperinflacion. 4. wos pobres resultados de la economfa son un factor que explica las malas condiciones de salud existentes en el PenS. Entre todos los palses de Ia region, el Perd ocupa casi el lltimo lugar en los indicadores de salud. En 1991 la epidemia do c6lera demostro en forma dramatica las precarias condiciones sanitarias imperantes en todo el pafs. Sin embargo, en materia de educacidn, esti cerca del primer lugar en lo que respecta a la proporcion de alumnos matricutados en escuelas prtmaria y secundaria, pero el elevado porcentaje de repitentes y la mala calidad de la ensefla representan un problema. La disponibitidad de recursos pdblicos para prestar srvicios socWales va en disminucion debido a la brusca reduccidn del gasto pdbico global en los iUtimos cinco aflos. La declinaci6n se explica por varios factores, entre los que figura la grave recesi6n y la desaparicion casi por completo del sistema impositivo del pats. Se protegi6 a los sectores sociales de las reducciones mais extremas que experimentaron otras esferas pdblicas. Sin embargo, debido a la disminucion de la disponibilidad total de recursos, el Perd suele gastar menos quo sus pakses vecinos en estos sectores. 5. En agosto do 1990, el Gobierno de Fujimori puso en marcha un programa de estabilizaci6n y reforma estructural de tipo ortodoxo do gran envergadura. En la etapa inicial, el Gobierno adopt6 dristicas medidas desdnadas a estabilizar la economfa y restablecer los lazos con la comunidad financiera internacional. La segunda etapa de la reforma de polfticas comdz6 en marzo de 1991 y se baso en la adopcidn de una serie de medidas estructurales de base amplia. El proposito de tales reformas era promover la competitividad y desreglamentar la actividad econ6mica. Para reducir la pobreza se requieren varias reformas fudamentales. La capacidad del Perd para invertir ia brusca cabda de las recaudaciones impositivas es el punto central para recuperar el equilibrio fiscal. Tambidn resulta vital a fin de garantizar la capacidad del Gobierno para proporcionar servicios bisicos en el largo plazo. El aumento del empleo y los salarios en las zonas urbanas es un factor importante que determinarIl 01 ritmo que tendra la reduccidn de la pobreza, tanbo por su influencia directa en la actal poblacidn urbana pobre como por las oportunidades que crme pan la mlgracidn desd. las zonas rurales. La mayor neutralidad del sistema de comerco puede respaldar un nwdelo de expansion industrial con un uso m4s intensivo de mano de obra en los sectores que compiten con las Importaciones, comno tambien en e1 de las exportaciones. El Goblerno ha avanzado con rapidez y arrojo para liberaliw el sistema de comercio. Sin embargo, la reforma de este sector resuta mis eflcaz si los factores de produccidn tienen libertad para responder a las fuerzas del mercado. En el caso del Perd, las polifticas estatales existentes desde el decenio de 1960 han restringido fuertmemnte el movimiento de los factores. Para poder ofrecor mis oportunidades de empleo urbano, una reforma dave es la desreglamentacdn del mercado de trabajo. Las poifticas de fomento del desarrollo rural tamblen constltuyen un elemento importante de la estrategia para aliviar la pobreza. 6. El crecimiento es un com onente importante de esta estrategia, pero no el 1nico. Es preciso aplicar progranu que permitan asegurar que los pobres puedan aprovechar las oportunidades de arabajo que se presenten y proteger a algunos grupos vulnerables que no estAn en condiciones de participar plenamente en la economfa. Para poder disefar estos tipos de programas se requiere informaci6n sobre los pobres. El perfil de pobreza del Perd quo se elabora en el present. informe se basa en datos recogidos en una encuesta sobre.niveles de vida realizada en los meses de octubre y noviembre de 1991. Se calculan dos Ifneas de pobreza. Las unidades familiares se clasifican como extremadamente pobres si sus gastos totales son inferiores al costo de una canasta b$sica de alimentos. Se clasifican como pobres si sus gastos totales son inferiores al costo de una canasta basica de alimentos, mis una estimaci6n de los gastos por concepto de artfculos no alimentarios. Aproximadanente la mitad de la poblacidn estudiada cae bajo la lIfnea superior de ambas Ifneas de pobreza, y la quinta parte cae bajo e0 Ifnite inferior. 7. 4Pdnde viven los pobres? Al comparar las cuatro regiones del muestreo (LJima, litoral urbano, y sierra urbana y rural), la incidencia de pobreza es mayor en la sierra rural. En esa zona, dos torcios de las unidades familiares son pobres y el 47% del total son extremadamente pobres. Tan sdlo el 10% de las unidades familiares de Lima son extremadamente pobres, en comparaci6n con alrededor del 20% en el litoral urbano y en las regiones de la sierra. En cada una de estas tres regiones, el porcentaje de unidades familiares pobres alcanza a aproximadamente el 50%. Se estima que la sierra rural alberga la mayor cantidad de personas extremadamente pobres (1,6 millones). Por su tamalho, en Lima vive el mayor ntlmero de pobres (2,5 millones). 8. Por lo general, una persona pobre vive en una unidad familiar mas extensa que una persona no pobre, que en promedio incluye a uno y medio individuos m4s. Cada trabajador perteneciente a un hogar pobre sustenta a cuatro miembros de la familia. En el caso de los no pobres, esta cifra baja a tres. El consumo de alimentos per ctpita en una unidad familiar extremadamente pobre representa s6lo el 40%, en comparaci6n con el de otros hogares, y la misma relacion en lo que respecta al consumo total alcanza al 30%. 9. Entre la poblaci6n pobre, s6lo en Lima se registra una desproporcion deuriidades familiares encabezadas por una mujer. Las poblaciones indfgenas en el Perd estAn desfavorecidas. Consideradas en conjunto, las unidades familiares zeabezadas por hablantes de quochua y almar representan el 40% de la poblaci6n extremadamente pobre y alrededor del 25% do la poblacidn pobre. En Lima, es algo mis probable encontrar inmigrantes quo no inmigrantes entre los pobres. Estos so encuentran mayoritariamente en dos agrupaclones ocupacionales: los trabajadores independientes y los trabajadores del sector privado. 10. Los aimentos bsioos quo representan la mayor proporclon de los gastos do la poblacion pobre son 0l aoz, el pan, el az Icar, los tubEculos y la came. Los alimentos mas importantes que so obtienen mediante produccidn propia son los tuberculos, seguidos de la came y las hortalizas. Los gastos mis importantes por concepto de productos no alimentarios corresponden a detergentes, transporte pdbilco, jab6n y vestuario. A pesar do que los pobres serin los boneficiarios ds cualquier rebaja do los preclos de estos productos bisicos como resultado de las medidas de desreglamentacion y liberalizacion del comercio, no hay nhngdn producto ni servicio que pueda subvencionarse con objeto do beneficiar en verdad a los pobres. 11. Poco mis de la mitad de las unidades familiares extremadamente pobres tienen acceso a una red p6blica do abastecimiento de agua, en comparacidn con el 80% de la muestra completa. La poblacion madamente pobre quo tiens acceso a una red piblica se ha visto mis afectada por las reducciones del sumnistro quo otros grupos. Menos del 30% de los extremadamente pobres cuentan con servicio pdbllco de alcantarfllado, en comparacion con poco mis del 60% de la muestra completa. Los niveles do educacion estin estrechamonte vinculados a la pobreza. Es mis probable encontrar jefes de hogar que no han completado la enseflanza secundaria entre los pobres. 12. En lo que respecta a las unidades familiares quo poseen tierras, los pobres tienen aproxhnadatente 50% menos superficie quo los no pobres. Cerca do un tercio de los hogares pobres poseen tisrra do regadfo, en comparaci6n con alrededor de la mitad de los no pobres. En el caso do las unidades familiares mis pobres do la s3erra rral, todos o al menos la mitad do los trabajadores estan ocupados en actividades agrfcolas, en tanto quo en el do los hogares quo gozan do mejor situaci6n, una mayor proporci6n de los trabajadores realizan otras labores en forma independiente. Los principales cultivos quo producen los pobres de la sierra rural son la papa, la cebada y el trigo. Los pobres producen principalmente ma£z blanco, cebada, papas, oca y olluco. 13. El perfll de pobreza ofrece una orientacion general para la formulacidn de una estrategia de alivio de la pobreza en el Perd. Primero, los programas focalizados en grupos especfficos deben centrarse en los extremadamente pobres, que representan la quinta parte de la poblaci6n estudiada. Segundo, los programas para aliviar la pobreza entre la poblacion extremadamente pobre deben dirigirse a la sierra rural y a la poblaci6n indfgena. Pars reducir la extrema pobreza es preciso mejorar el acceso a los servicios pdblicos, en particular la educaci6n. Estas unidades familiares estin mis expuestas a presentar un estado precarno de salud porque carecen de agua potable e instlaciones de saneamiento. Tercero, el trabajo agrfcola se asocia positivamente a la pobreza. Es posible que la adopci6n de ciertas polfticas agrfoolas permita reducir la pobreza, como lIs reformas relativas a los tftulos de propiedad de tierras, la rehabilitacidn o construccidn de obras do riego en pequefia escala y medidas para aumentar Is productividad de los cultivos ms importantes para los pobres. Otts medidas desdnadas a reducir ls pobreza no so relacionan con la agricultura. Por ejemplo, esas unidades famuliarms so beneficiaran. de oportunidades de trabajo no agrfcola. Cuart, los pobres (a difercia do los extremadamente pobres) tienen un acceso reladvamente bueno a los serviclos piblicos. Son hogaes pobres ya sea porque sus integrantes tienen trabzjos mal remunerados o poco productivos en el sector privado o el sector Informal, o porque esthn desempleados. Requieren trabaos mEs productivos para elevar sus gastos por encima del nivel de pobreza y estin relativamente blen preparados parn sprovechar las oportunidades de empleo quo se presenten. La ejecucidn del programa de reforma econdmica y liberalizacidn del mercado de trabajo es el elemento mAs importante para reducir la pobreza en este grupo. Quinto, los pobres se beneficiarfan si disminuyeso el precio del trigo, el arroz y el az4car. Asimismo, se verfan favorecidos si se eliminara la prohibicion de importar ropa de segtnda mano y se rebajaran los preclos de los detergentes y el jabda. Per Iltmo, el Gobler=o debe reconsiderar el sistema do sobretasas que se aplica a los productos agrfcolas. Con la excepcidn de los productos licteos, el sistema ya sea perjudica a los pobres (azdcar, arroz y productos derivados del trigo) o beneficia a los agricultores quo gozan de mejor situacidn (malz amarllo y sorgo). 14. Los servicios sociales pueden desempeflar una importante doble funcidn en el alivio de la pobreza. Primero, las mejoras en las esferas de la salud, nutci6n y educacion abordan directamente las peores consecuencias de ser pobre. Segundo, existen abundantes pruebas de que la inversi6n en capital humano, especiaWmente en educacion, permite atacar una de las causa is Importn de la pobreza. Los programas que tienen mayores repercusiones sobre los pobres son los de educaci6n primaria y atencido bsica de la salud. 15. En materia educacional, la matrtcula on la ensefaiaza primarla ha umeontado en forma impresionante en el Perd. Sin embargo, esto incremento estuvo acompafiado con una disminuci6n de los gastos por alumno y un exodo de profesores titulados del sistema. La eficiencia intna es baja. Los porcentajes de repitentes son altos, particularmente en los primeros grados. Los alumnos pasan, en promedio, 1,3 afios en cada curso, por lo que en sexto grado casi tres cuartas partes do los estudiantes estEn por sobre la edad debida. En promedio, por cada alumno que egresa, el sistema gasta recursos equivalentes a 8,4 afios de escolaridad, es decir, 40% mis que lo que serfa necesario si no hubiese repitetes ni desercidn escolar prematra. Un problema es la mala calidad de la educacion preescolar. Ademnis, existen marcadas discrepancias en cuanto a los logros educacionales y la eficiencia a traves del pafs. La falta de materiales y las malas tdncas pedagdgicas constltuyen un problema particular en las escuelas de enseftanza smultnea de varios grados en las zonas rurales. Otro aspecto que preocupa es la persistencia do una tasa rlativamente alta de anaifabtismo, ya quo so ha progresado poco en SU srradicacitn on las zonas rurales y entre las mujerm. Como consecuencia, el ndmero de analfabetos aumento en 1,5% entre 1980 y 1986. 16. En la esfera de la salud, a pesar de la expansion de la infraestructura para la atencidn primaria, el Perd registra algunos de los peores indicadores del continente, particularmente en las zonas rurales. Las tasas de mortalidad materna y de nifios menores de un aflo se cuentan entre las mas altas de America Latina, en especial en la poblacidn pobre. Podrtan resolverse muchos problemas de salud si se concentraran mayores esfuerzos en la atencidn primaria. No se materializan todos los beneflcios del sistema de establecimientos de atencidn primaria debido a la Insuficiencia de equipo, la mala distribucion del personal y la escasa proporci6n de recumsos que se destinan a los programas. En general, la cobertura no es adecuada, tampoco la intensidad y calidad de los servicios. Lc composicidn de especialidades no es la optima, principalmente porque la relacion enfermneras/m6dico y enfermeras/poblacion es demasiado baja. Asimismo, existen datos inquietantes relativos a la escasa utilizacion de los servicios de atenci6n primaria de salud. Es probable que tal situacion se deba en gran medida a la falta de una oferta efectiva. En parte, la explicacidn puede estar en que los usuarios le atribuyen un valor limitado a tales servicios debido a personal no bien preparado a la falta de equipo, suministros y otros en los establecimientos de salud. 17. En lo que respecta a la nutricion, el Perd registra tasas relativamente altas de malnutrici6n infantil e insuficiencia ponderal del recien nacido. En general, la seguridad alimeonaria para los mis pobres ha disminuido. El importante aumento de la incidencia de enfermedades diarreicas agudas e infecciones respiratorias agudas tambien revela un mayor deterioro de las condiciones de vida, menor eficacia do las medidas de salud preventiva y un estado nutricional de la poblaci6n cada vez mas vulnerable. En algunas zonas del pafs se observa una deficiencia de micronutrientes. Segdn una encuesta nacional realizada en el perfodo 1986187, se estima que el bocio es una endemia en el 88% de las comunidades de la sierra y la selva. Estudios en pequefia escala indican que la anemia constituye un problema de salud pdblica en las mujeres embarazadas y en perfodo de lactancia, y en los niflos. La respuesta a la nalnutrici6n se ha basado en medida excesiva en la asistencia alimentria, prestdndose poca atenci6n a la adopci6n de medidas sanitarias complementarias, la suplementaci6n de micronutrientes y la promoci6n de mejores prkticas sanitarias y nutricionales, incluida la lactancia materna y la vigilancia del crecimiento y desarrollo infantil. Los objetivos del Programa de crecimiento y desarrollo in&ndl del Ministerio de Salud son amplios y bien findamentados, no asf el presupuesto ni las actividades para lograrlos. Tambidn existen problemas de mala coordinaci6n entre los numerosos organismos que actian en el campo de la nutricidn, falta de un marco global para las intervenciones en esta materia, ausencia de normas y directrices y deficiencia de la vigilancia nutricional. 18. LC6mo usan los pobres los servicios sociales en el Perd? La pobreza incide en la asistencia escolar en dos formas. Primoro, los nifios de las familias pobres comienzan a asistir a la escuela a una edad mis tardfa quo los de las familias no pobres; segundo, una mayor proporci6n de niflos de las famulias mfis pobres muca asiste a la escuela o abandona los estudios po. Uno de los factores que influye en los porcentajes relativamente altos de repitentes provonientes de las unidades familiares mas pobres es la baja asistencia a las guarderfas infantiles. Las tasas de asistencia de las niflas son mAs bajas que las de los niflos en la poblaci6n extremadamente pobre y en todas las unidades familiares de la sierra rural. 19. En un programa para alivlar la pobreza, la primera prioridad en materia de educaci6n es aumentar la eficiencia intema de las escuelas de las zonas pobres. El mejoramiento de las condiciones en las escuelas rurales do enseffanz simultdnea de varios grados beneficiarfa de manera especW a los pobres. En segundo lugar, mediante un programa de entrega de libros de texto y materiales didicticos y de formacifn de profesores es posible mejorar la calidad de la ensefianza en otros tipos de escuelas en las zonas rurales, aumentar el tiempo quo los alumnos dedican a tareas escolares y ofrecerles experienclas de aprendizaje mis pertinentes. En tercer tdrmino, es preciso hacer mis biucpid en la educaci6n preescolar. Deben tomarse medidas para mejorar la preparacidn de los niflos para la escuela en las guardertas infatiles estatales y del Programa No Escolarzado do Educacion Inicial (PRONOEI) y fomentar una mayor conciencia entre los pobres de la importancia de la educaci6n preescolar. Un ostrategia para atraer a alumnos mns pobres serfa ofrecer programas de alimentacidn en eate nivel en alganas localidades. En cuarto lugar, como parte do los esfuerzos por aliviar la pobreza se deberfa contar con un programa para impartir lnstruccidn funclonal a las mujeres que no hablan espaflol, con inclusi6n de la slfabetlzacidn. Los programas dirigidos a reducir el anafabetismo en este grupo deben considerar que estas personas estin muy dispersas y quo, en consecuencia, resulta diffcil llegar a ellas, y tambien que su tiempo libre es mfnimo. La experiencia recogida en otros passes sugiere recurrir a las ONG. Estas organizaciones tienen la capacidad para Ilegar a zonas marginaas e incorporar programas de alfabetizaci6n en sus actividades pemanentes, lo quo permite reducir los costos. 20. En materia de salud, la cobertura de vacunacin para los nifios es reducida, particularmente entre los pobres y en la sierra rural. En general, aIrededor de la mitad de las personas que se encuentran enformas solicitan atencid mEdica. Entre los extremadamente pobres, esta cifra disminuye a alrededor de una de cada tres. La brecha entre los pobres y los no pobres es especimente grande en la sierra. ,A ddnde suelen recurrir los pobres cuando se enferman y a quien suelen consultar? En comparrcidn con los no pobres, existen mis probabiidades de quo los pobres recurran a los centros y postas de salud, al igual que a las fmacias. Sin embargo, la proporcidn mis alta de los pobres (30%) recurre a los hospitales. Es mis probable que los pobres consulten a personal paramedico, rmactcos y curanderos tradicionales que el resto de la poblacidn. Pero a lo largo de todos los niveles de gasto, la fuente principal de consultas medicas son los profesionales de la salud. Hay menos probabilidades de que las personas pertenecientes a unidades familiares extremadamente pobres adquieran medicamentos, particularmente en la sierra. La falta de acceso a un sistema pdblico de alcantariliado estL aamente relacionada con los problemas de diarrea en los niflos. Si bien s6lo el 17% de las unidades famfliares carecen de alcantarillado, reprentan el 35% de los casos de diarrea infantil. 21. Los programas dirigidob a los pobres deberfan concentrarse en proporcionar a las madres y a los niflos pequeflos una atenci6n primaria de salud adecuada. Es importante mejorar el suministro del equipo bisico, materiales y medicamentos necesarios para llevar a cabo estas actividades, particularmente en las zonas pobres. La segunda prioridad es la prevencidn del colers y su tratamiento, y la tercera, el fortalecimiento de los servicios de urgencia de los hospitales. 22. Incluso si so mejoraran los servicios sociales, en el corto plazo es posible que algunos grupos sigan siendo vulnerables debido a que ya viven en condiciones extremas -por ejemplo, las unidades famillars en las que no hay ttabajadores empleados, o las encabozadas por personas que solo pueden encontrar trabajos poco productivos en el servicio domestico o la agricultura. Para estas personas, la existencia de programas de compensacion sociales blen concebidos podrfa complementar los dos elementos principales de la estrategia para el alivio de la pobreza -promocidn de un crecimiento de base amplia y mejoramiento y distribucidn mgs equitativa de los servicios sociales. 23. Los programas de empleo pueden reducir la pobreza al proporcionar trabajo (y, por lo tanto, ingresos) a los necesitados, y generar beneficios adicionales a traves del mantenimiento y creacidn de infraestructura. Estos programas pueden ser eficientes y de costo mfnimo porque las personas estan dispuestas a trabajar por un salario relativamente bajo. Su efecto en la pobreza sera mayor si las unidades fbmiliares cuyos jefes de hogar se encuentran desempleados pertenecen en mayor medida a grupos de poblacidn pobre quo a otros grupos, y si con el proyecto se mejora la in aestuctura o las instalaciones que utilizan los pobres. En el Perd, alrededor do dos torcios de los jefes de hogar que se encuentran sin empleo son pobres, y el 30% son extremadamento pobres. Sin embargo, las unidades familiares encabezadas por una persona desempleada representan una pequefla proporcidn de ios pobres, por lo general entre el 3% y el 4%. En el litoral urbano y en la sierra, la proporcion de poblacidn extremadamente pobre es algo superior -entre el 6% y el 8%. Es importante que estos programas sean eficientes en funci6n de los costos. Las personas empleadas en el marco de un programa de empleo temporal deben ser pobres. Esto se puede lograr mas facilmente si la escala de salarios se fija en un valor suflcientemente bajo para quo las personas que tienen alternativas de mejor salario (y mayor productividad) no se sientan tentadas a dejarlas. La escaa de salarios asegura una autoseleccidn automatica. La escala promedio que se recomienda para un programa de empleo de emergencia en el Perd es el sueldo m&imo legal. Otra cactftica de diseffo de un programa de este tipo que oimentarfa la eficiencia en funcion de los costos serfs la seleccion y administrad6n de los proyectos impulsadas por la demanda local. 24. Las unidades familiares pobres gastan, en promedio, dos tercios de sus ingresos en alimentaci6n, y las de la sierra rural, tres cuartas partes por ese concepto. En consecuencia, la proteccion de la seguridad alimentaria de los pobres es una forma ii de proteger los niveles de vida. La asistencia alimentaria tambien puede proteger el estado nutricional de ciertos grupos vulnerables, como las mujeres embarazadas y en perfodo de lactancia, los nifios pequeflos y los enfermos y ancianos. La asistencia alimentaria constituye un recrso importante para los sectores sociales. En 1991 la asistencia alimentaria de los donantes alcanz6 por lo menos a US$150 millones. A traves de programas de este tipo se proporcionaron mas de 226.000 toneladas metricas de alimentos a por lo menos 9 millones de beneflciarios. La asistencia alimentaria para los pobres de las zonas urbanas es amplia e importante en Lima. Las transferencias en efectivo y bienes (incluida la asistencia alimentaria) provenientes de organizaciones sin flnes de lucro representan la cuarta parte de los gastos totales en todas las unidades famiiares e pobres, y casi el 10% de los gastos en todos los hogares pobres de Lima. Sin embargo, en otras zonas estas transferencias representan un porcentaje insignificante de los gastos de las unidades fanilares de los pobres. El hecho que la asistencha alimentaria no llegue a los pobres rurales indica quo deberfan explorarse otros mecanismos, como la distribuci6a de cupones para alimentos. La asistencia alimentaria parece ostar relativamonte bien focalizada en los pobres de Lima; entre los no pobres, s6lo so benoicia el 6,5%. en comparacifn con et 75% de las unidades familare a pobres y casi el 40% de los pobres. En otas zonas, sin embargo, mis del 40% de los beneficaros no son pobres. 25. Los grupos mis vwlnerables desdo el punto de vista nutriclonatl son las mujeres embaazadas y en pertodo de lactancia, y los nifios en edad preescolar, paticularmente los menores de dos aflos. La cobertura de los programas de asistencia alimentaia directa para las madres y los niflos parece ser adecuada en las zonas urbanas, pero debido a los bajos niveles de asistencia quo so brinda a la mayorfa de los beneficiarios y a la fadta do actividades complementarias de promocion iutriclonal y cuidado de la salud, es improbable que tales programas tengan un efecto significativo en el estado nutricional de la poblacidn. Ademis, las raciones para los beneficiarios no so basan en un conocimiento de los deficit de nutientes obsarvados on los participantes. La cobertura de los programas de asistencia alimentaria entre los pacientes con enfermedades crdnicas, especialmento tuberculosis, es insuficiente y so precisa aumentada. La cobertura del programa de ainerntcin escolar deborfa concentrarse en un grupo mis poquefio de nifios y deberfa incrementarse la asistencia a niveles que tengan un efecto positivo en el ausentismo y la desorck$n. 26. Dos cesdones que surgen en la aplicaci6n de la estrategia para el alivio de la pobreza son la focallzacln y los arreglos institucionales. La focalizaci6n procura dsitbuir las transferoncias u otros beneficios solamento a quienes han sido ideAtcados como el grupo beneficiario en interis de la eficiencia. Los costos do opevaift del sistoma administrativo no deben ser tan elevados, de manera que no absobno el ahorro quo representa la exclusidn de los no necesitdos. En el Peri, el factor georico es el indicador de mayor valor como mecanismo pan el enfoque selectivo, Al dirigir rocursos a la sierra rural, se puede llegar a una de cada dos unidades famuliares extrmadamente pobres del pafs. 27. Algunas caracstleas s erchamento relacionadas con la pobreza indican los tipos de sseadcia que beneflciarfan principalmente a sj- pobres. Casi todas las unidades fmliares que consumen agua de pozo son pobres. Entre otras cancterticas en materia de vivienda estrechamente relacionadas con la pobreza figuran el uso de letrinas y la ausencia de electricidad o instalaciones d saneamieon en los hogares. 28. El Perd parece set un entorno apropiado parm el establecimiento de un fondo de inversidn social. La experiencia en materia de fondos sociales en otros pafss indica quo su eficacia depende principalmente do le capacidad pan seleccionar los proyectos adecudos, lo cual depende a su vez de la calidad del personal y so independencia de las presiones polfticas. En agosto de 1991 el Gobierno perno establecid un fondo de lnversidn social, el Fondo Nacional de Co cin y Desarrollo (FONCODES). Los avances para poner en marcha el FONCODES han sido lentos y, al principio, la confzsifn reinante sobre la forma en quo operarfa (*impulsado por la demanda' o 'de arria abajo") af%ct adversamente la calidad de algunos proyectos. Sin embargo, su desempeflo comenzo a mejorar a mediados de 1992. 29. El Fondo de Compensacidn Regional -quo opera en el marco del presupuesto del Perd- tiene la posibilidad de contribuir a la formulacils de una estrategia para aliviar la pobreza. Sin embargo, actualmente no se estu baciendo ningdn esfuerzo por dirigir mas recursos hacia las zonas mas pobres. Solo oa factible y significativo un cambio en la formula utilizada para la asignacion deolos recursos si aumentaran las recaudaciones impositivas y existiera una mayor estabilizaci6n fiscal. 30. La magnitud y gravedad de la pobreza en el Perd exige la participacido actfva de todos los recursos, incluidas las ONG. Estas organizaciones tienen varias ventajas. Estifn en condiciones de movilizar y utlizar elevados nivales de recursos, y ademas pueden Ilegar eflcazmente a las poblaciones marginadas. Las ONG constituyen una instancia importante para la promocidn de las metas y programas do alivio de la pobreza. En el Perd existen numerosas ONG, que cubren diferontes campos y zonas del pafs. 31. Las ONG tambien tienen algunos puntos debiles. Suelen set vulnerables a la influencia de los donantes y tienen dificultades para formular propuestas en materia de polfticas. La colaboracion con el Gobierno se ve limitada por algunos obstculos reales y otros que se perciben. La dispersio& de las responsabilidades del Gobierno en una amplia gama de organismos estatales dificulta la entrada de las ONG. Asimismo, existen diferencias relativas a la gestion y las capacidades admihistratlvas de las distintas ONG. Algunos organismos estatales las ven como competidores en vez de posibles organismos de ejecuci6n. La desconfianza obstaculiza la colaboracidn. El Gobierno deber(a establecer mecanismos claros y eficientes para la colaboracidn con las ONG. La reciente formaci6n de consorcios de ONG constituye un mecanismo que deberia explorarse a fin de alentar una mejor coordinaci6n, dialogo y planificaci6n conjunta con el Gobierno. 32. Recientemente el Gobierno elaboro una estrategia para el alivio de la pobreza cuya finalidad era fijar las prioridades de un programa de alivio de la pobreza en el Perd. En general, concuerda con las conclusiones y recomendaciones del anS1isis que se efectia en este informe y reconoce que para lograr dicho alivio, se requiere esencialmente una estrategia econ6mica con el objetivo de mejorar las condiciones en que viven los grupos exremadamente pobres mediante progrms de ayuda alimentaria, salud, educaci6n y generacidn de empleo. 33. Existen dos fuentes de financiamiento para estas medidas tendientes a aliviar la pobreza: el Estado y los donantes. A fin de atraer suficientes recursos provenientes de los donantes, el Gobierno debe demostrar claramente su propio compromiso con el alivio de la pobreza. Se estima quo en 1990 el gasto pidblico total en salud y educacion en el Perd alcanzd tan solo al 2,2% del producto interno bruo (PIB). A medida que la reforma tributaria y las medidas que se adopten pan fortalecer la administracion tributaria mejoren la generacion de ingresos, se recomienda que el Gobierno haga esfuerzos por incrementar los recursos que se asignen a los sectores de salud y educacidn. El gasto en educacion y salud de altedodr dd 4% de PIB ocrresponde a& promedio do AmEica LAdt y a spoxmel nivel que so gast6 en el Perd en la primea mdtd ded deeao de 197,0. , - 34. El Gobierno del PFrd ha dado un paso hmpo_ pra reducir b poboa ae d pus. A mediano y largo plaz so roequl us crecido do ba empoi pia alivW los devados uveles de pobrea. Es as d objotv det program. do stabizada y eusto. Sin embago, esto no es suf,lonto_ a cOrOf plazo., Es prso adwopw medidas pam proteger a los gi vulnl y ar quo los pobm pueda aprovecar las mayom p s quo so presoan ean a ocomfa refouada A fin de abordar ess ditinm nec s, and pel st. infoms so ha eumlmado. d perlil de los pobres del Pord y o ha recomendab alunas polfca prHoria y programas dirigidos a elios. El Gobeo ya ha dado upaso bilW m ta e ate. La estrategia par d alivio do pobrm a own ma y priados clam y apropiadas en el marco do a ap lia do polia ecoicas quo mantengan la estabilidad macroonimica y promuv d ar mkoi . El desafo -y a prueba- respecto del grado de deds del Gobleno sad b m_da an quo las polftlcas y programas Mos so rijan pot em st.ategL Les roset. avances en FONCODES son alentadores. Peo para asuWar quo los obres oa torecibon los beneficios del aj, d Goble. ha do Italecer los servidos sodaes mIS fdamenales para ellos y proporcdor eWd do proteodd m;is ecaces pa los gupos mis vulnerables del pals. PUU: Couponentes del sector sodal pas una stratega de allio do Il pobroa CuAdNo mrnes Ed~wd6 Bajas ta de asistoncia Ofiecer programas de Proyeto de mdormleto escolar de los nifiOs allimentaci6n eolar an di la alinueacd escolar pobres, on particular en la es zonas sierra, rura Proyecto sobre esceas de enheflaa sbnuld a de wio gaduos Alto porcentaje de Aumentar la eflciencia Proyecto sobre escuas de repitne, en particular de interna de las escuelas de enhela sbnulrdea de los alumnos pobm y en las zonas ruraes, en wveos grados las zonas rures paricular mediante di mejorarmiento de las Proyecto de entrega de condiciones an las escuelas libros de exo rurales de e_nsenza simultAnea de varios grados. Entrega de libros de texto y materies didacicos, y formacodn de profosoro orientada a las necesldades de est. tipo de escuelas y otras ubicadas en zonas ubas y ursies maginales pobres Mejorar la calidad y la Proyecto de mejorwmuemo asistncia escolar en el de los senicos de programa preescolar. educacidn preescolr Mejorar la preparacidn para la escuela de los nifios 'ue asisten a las guarderfas infantiles estales y del PRONOEI Persitncia de una alta Respaldar un programs en Proyecto de aWabtadci6n tasa de analfabetsmo entre que se les imparta y capatacIdn laboral las mujeres que no hablan instuccidn funcional espaflol bisica, apoygndose en las ONG Satbd Maa caldad do b atmici PWporcionar inmnizacda a lts grupos vulnoables - antltiet ca prenatal y madim y nis-, suplemento de bierto, especlm on tdmlnos vlgHlar el aumento de peso, dd uemro de contatos y proporcionar suplementos atimentlclos, si es neces_rio, ast como personal calificado para atender los partos de alto riesgo. Caaitar a pauerm para los partos de bajo ricsgo Aumentar la cobertura y Program de caudemo y frecuoecna de la vigilancia desawolo aUM dc crecimleato an la bae (Mnr de Suod) paicularmento de los nibos menores do dos alos Escasa cobertwa de So deben hacmr esfueros Poam de acroimo y vacenac6n doe los nifuos pama aumntr la cobertuma da i monm do dos aft, y de vacunacidn de los nifbs (Mini_b d Salud) diminucida do ats menores de un abo en los establecimientos de satud Eca cobenura do los Foralecer la instruccidn en pgams do pbaflcacldn materia de planificacion de la fmilia familiar y aumentar el acceso a mtodos anticonceptivos Escasa utflizacidn de los Rehabilitar las instalaciones Proyct de mo servicios do atenkn deterloradas y mejorar el de la a pww pilmaua e primaria de la salud por los =ministro de equipo mm de ecm poabra pobres, partcuarntu an bEsico y medicamentos ean la siena los establecimientos de salud Mala distrlbucidn do los Examinar las cuestiones Proyecto de recursos profesionales. No relativas a la gestidn e pe*fccIoniveato de los so cuenta con suficientes incentivos para el personal. recursos hwnaos en zonas profesiorales de la salud en Mejorar las condiciones de de exma pobreza las rgiones menos alojamiento del personal de desarlladas y son los establecimientos de insuflclentes los que atencidn prinaria de la trabaJan on servicios de salud atencift ptimaria de la saud. No hay suficiente Promover un mayor uso de personal de enfermerfa los recursos locales mediante la capacitacidn de personas no profesionales, por ejemplo Dado que las unidades Promover la construccion Proyecto de revncin del familiares pobres tienen de redes de abastecimiento C6lera y otas menos acceso a redes de agua y saneamiento de eqfermedades taW pdblicas de agua y bajo costo. En los lugares por el agua alcantarillado, sus nifios donde no existan estin mis expuestos a instalaciones de sufrir diarrea saneamierto, deberfan construirse letrinas El cd6era es un grave, Reforzar las campahas Proyecto de prevencidn de proble de salud quo educativas, asegurar la cdera y otras afecta principalmente a los disponibilidad de efemedes srn pobres suministros para el por el agua ratamiento de casos agudos, y rehabilitar las redes de agua e instalar letrinas En algunas zonas, una Reforzar los servicios de Proyecto sobre servcios de proporcidn importante de urgencia de los hospitales urgencla en zonas de los pobres utiliza los de las zonas pobres exrmna pobreza servicios hospitalarios Nutrli6n Ausencia de normas y El Gobierno deberfa crear pautas relativas a las normas relativas a tres inbervenciones en materia esferas fundamentales y de nutrici6n vigilar su cumplimiento: i) costo unitario de las intervenciones; ii) practicas de programacidn de la asistencia alimentaria, y iii) recopilacidn de informacidn y evaluaci6n de las repercusiones Ningln organismo del El Gobierno debeda Gobior tiene la oncomendar esa fimcidn al responsabiidad do Ministerio do Salud movlizar recursos Carencia de un sistew de Deberfa vigilarse a una vigilancia nutricional a pequefla poblacidn nivel nacional centinela do reprentates de importadtes gNpOS de beneficiarios La inexistencia de un El Gobleo deberfa marco para las implomentar el plan do intervenciones en materia nutricidn nuricional conduce a la duplicaci6n de funciones, al descuido en lograr inportantes mejoras en el estado nutricional de la poblacidn y a una utiflizacidn menos que dptma de los recursos Curva de crecimiento Se deberfa iniciar una Programa de crecimiento y inadecuada de los niilos campafia de informaci6n, desarrollo infantil duranto el perfodo de educacion y comunicacin (Ministerio de Salud) destete destinada a fomentar el uso de tEcuicas de destete apropiadas El bocio es una endemia en El Gobierno deberfa Programa Nacional de el 88% de las comunidades subvencionar el aumento Control del Bocio y de la sierra y la selva. La de los costos de produccion Cretinismo Endemicos anemia tambiEn representa de la sal yodada y (PRONABCE) un problema de salud comprometer pequeflas pdblica, al igual que la plantas de produccion quo avitaminosis A comercialicen sal proveniento de fuentes naturales Suplemento de hierro para las embarazadas; distribucidn semestral de vitamina A tiara los nifios Asistuida aimentarla Los programs de El Goblerno deberfa Vaso do Labo asistencla allimentaia no esudiar mecnismos Rlegan a Importantes grupos alternatlvos pas legar a de beneficiaros pobres, en esos grupos, Como la particular unidades distrlbucldn de cupones familiares en la sierma rur para alimemos, o Introduclr donde la seguidad un programa piloto. alimentadia ba disminuido. Debrfa mejorarso la Asimisrno, la mayor calidad de la proporci6n do beneficialos adm cion y del del programa Vaso de control del programs Vaso Leche son nifios en edad de Leche escolar. Casi el 20% de sus benefclcarlos no son Se deberfa ampliar la pobres asistencia alimentaria a las madres y los ufios Programa do Alimenackn Algunos productos bEsicos y Nutricifn a la Familia do de los programas de Alto Riesgo (PANFAR) asistencia alimentaria no Como productos basicos so son las fuentes de deberfan seleccionar las nutrientes mL econdmicas; fuentes de nutriene mEs por ejemplo, la lecbe en el economicas que sean programs Vaso de Lsche aceptables para los beneficiarlos. Asimismo se deberfan fortificar con hierro los alimentos basicos utilizados en los programas de asistencia Es probable que los efectos Las raciones para los de la asistencia alimentaria beneficiaiios debedan en el estado nutricional de basarse en un conomieoto los beneficiarios sean de los deflcit de nutrientos insignificantes que se observan en los participantes La asistencia alimentaria debe ir acompaflda de medidas educathvas PANFAR complementarias on materia de salud y nutricidn, incluida la lactancia maten y la vigilancia del crecimiewo y desarrollo de los niflos La Escuela Dofendo La El programa deberda ostam La Bascula Defindo La Via no llega a la ditigido a nifios de 14 Vida poblacid mds pobre y grado bAo y a los do las vUlnerbleS, y au efecto n oZas pobres, on Yez do materla nutricional as concent0a on Lima. minlmo Deberfa asegurar la continuldad de la alimhntacidn Programa de emploo Cdmo asegurar quo el El programa deberla FONCODES programa llegue a los ftrmularse de manera quo pobres, al tiempo quo logro foment. la autoseleccion los objetivos de alivio de la por los pobres. Si bien pobreza con un mfnimo de con una cantidad inferior al costos administrativos salario mfnimo se mejorara 01 ofroque sectivoe e11o tendrfa algunas desveotajas. Es posible que no so logren los objetivos en materia de alivio de la pobroza, y se desalnarf la partlcipacion de coutratists privados. Por estas razones, se deberfa ofrocer ol salario mfnimo. TambiEn se deborfa considerar una seleccion geogrica de los beneflciarios Adniinistrac6n de los Utilizacion de conratistas FONCODES programas de empleo privados impulsada por la demanda, y promocion de dicho uso * Los tlos que aparecen en bastala se refieren a peSifes de proyectos gubernamenales. Los tAdos en mpresidn normal corresponden a progrnmas en marcha del Goblerno. 1 From Economic and Social Crisis to Reform Introductdoi its divetsified and hatd-working labor force, a broad endowment of natural resources and dy- 1.1 Poverty is a long-standing problem in namic export performance.' This potential, how- Peru. During the last twenty years a higher inci- ever, was frustrated during three decades of heavy dence of poverty has persisted there relative to Government intervention in economic activity most of its neighbors in the region. The reasons for which resulted in a legal stmcture and policy envi- Peru's lack of success in reducing poverty are ronment inimical to growth. The overexpansion of many. But without doubt the dominant on4 is the the state through a growing number of public en- dismal perfotmance of the economy over an ex- terprises anu administrative and regulatory bodies tended period. However, in August 1990, the ad- led to a waste of resources. Because of the lack of ministration of President Fujinori initiated a major sufficient growth and rigid, closed markets, few stabilization and adjustment program. To date its groups had access to the means to improve their implementation and the broadening of economic livelihood. For the vast majority, economic oppor- reforms have been impressive. The starting point tunities were few and living conditions either stag- of a strategy to alleviate poverty in Peru is the ex- nated or deteriorated. ecution of these economic reforms since interna- tional experience shows that the first prong of ef- 1.3 Public policies seriously distorted most of fective and sustainable poverty reduction for any the markets in the economy. Trade policy relied on country is the promotion of broad-based growth, import-substitution with very high tariffs and particularly development which provides opportu- many non-tariff barriers, depriving the country of nities for the poor to use their labor. This chapter the benefits of concentrating on its comparative briefly discusses some of the main factors behind advantage. Although progress was made in the the poor economic performance of Pem and its re- early 1980's in liberalizing trade, the reform left flection in social conditions. It then highlights the many tariff exemptions in place. Moreover, it was main elements of the reform program, focusing on not sustained. Expansionary fiscal and monetary those aspects which would be expected to contrib- policies, combined with a deteriorating terms of ute most to poverty reduction. 1. This and the following section draw on Peru - Economic and Economic Stagation Sector Reform to Sustain Stabilization and Lay the Foundation for Development. Green Cover Report (No. 10361-PE, February 1992), and the President's Reports for the Trade Policy Reform 1.2 In the 1960s, Peru was one of the most (No. P-5666-PE, January 1992) and the Structural Adjustment prnising economies in Latin America because of (No. P-5714-PE. March 1992) Loans. 1 tade, and an appreciating real exchange rate led to basic wages. They included social security and latge curent account deficits Financing the defi- other payments (21 percent), vacations (10 per- cits through external borrowing becme increas- cent), bonuses (20 percent), profit sharing (4 per- ingly difficult. Instead of adjusting to these shocks cent), and payment to trust funds for years of ser- by letting the exchange rate depreciate, the Gov- vice and "labor stability" (17 percent). These ben- erment chose to impose trade controls Reversal efits significantly increased labor costs and de- of the earlier libealization began in 1982 and, by terred employment without improving workers' 1984, tariffs were inceased and many imports incomes. Real wages fell after 1970 and an in- once more required licenses. creasing share of the labor force became unem- ployed or joined the informal sector. Over the 1.4 The tax code became complex and full of three years since 1987 the minimum wage has loopholes and tax administration was ineffective fallen to 44 percent of its 1987 value and the aver- and evasion high. Extensive tax incentives also re- age salary and wage to roughy 30 percent of their duced revenues. These factors caused the tax sys- value at the same time. A longer comparison tem to lose its buoyancy. Over the period 1976-89 shows an even greater decline. The minimum no revenue from any tax increased pai-passu with wage in 1990 was little more than one-fifth of its income. As a result, tax revenues dropped from 16 value, measured in real terms, in 1970; the average percent of GDP in 1980 to 14 percent in 1985 and salary was less than one-fifth of its 1975 value; to 9 percent in 1988. In other countries at a similar while the average wage had fallen to less tan one- stae of development (i.e., per capita income quarter of its 1975 amount. These declines are around $1,200), the average ratio of tax revenues measured in the formal sector. At the same time, to GDP is 17 percent. Declning tax receipts con- the formal labor market which complies with the tnibuted to the deterioration of fiscal performance labor regulations shrank drastically. It is estimated and reduced the resources available for operating, that only 778,000 workers, or about 10 percent of maintaining, and investg in essential public ser- the labor supply, are wholly protected by the laws vices such as health and education. (1990). The limited formal sector employment re- flects the higher cost of labor, which not only has 1.5 Even policies and programs established to encouraged the substitution of capital for labor, but improve conditions for workers and farmers has reduced the competitiveness of formal sector proved to be detimental to those groups and to the firms and prompted their shift into the informal economy. Job swurity in the formal sector was sector. Between 1961 and 1988 the share of the la- constitutionally protected, and strictly enforced. bor force working in the informal sector rose from Workers became entitled to labor stability subse- 15 percent to 22 percent, while the share workung in quent to a probationary period of only three the prnvate sector fell from 36 percent to 25 percet months. A worker who was laid off could seek le- gal redress and, if successful, could choose either 1.6 In the case of farmers, the land reform in to be reinstated or to receive severance pay. Judge- the early 1970s severely restricted the marketabil- ments were rarely made in favor of employers be- ity of land, including its use as collateral, and made cause the definition of "just cause' for laying off a land tenure more uncertain when collective plots worker was ambiguous and difficult to prove and were parceled out. In addition, the import-substitu- the clim subject to verification by the Ministry of tion trade policy contributed to the persistent dete- Labor. The Labor Tribunal Courts created further rioration of the agricultural terms of trade as a re- problems because they were autonomous entities, sult of high trade barriers for industrial products, separate from the Peruvian court system, and un- chronic overvaluation of the currency and dis- der the strong influence of the Labor Ministry. criminatory tariff exemptions and multiple ex- Firms also needed "Ne authorization of the Labor change rates. Also, agricultural services were inef- Minisry to suspend, dismiss, or lay-off workers or fective and several large scale public agricultural even to redace working days or production shifts. investments were unproductive. The Government Fringe benefits, either legally required or custom- altempted to offset these disadvantages through ary in the formal sector, added about 70 percent to maive subsidies provided through the grain trad- 2 TABLE 1.1 PERU: PERFORMANCE INDICATORS OF TIE ECONOMY REAL R8AL GDP WVEStMENT AGRICULTURE INFIATION REAL WAGE GROWTH PRODUCTIVrYf GDP GROWTH RATE OROWTIH 1968-1977 39 0.175 1.6 16.6 0.6 1978-1982 2.6 0.097 1.6 64.9 .03 1983-1990 -2.0 .0.001 0.7 1397.8 .6.1 1. Ratio of GDP growth and investment to GDP. Units of real GDP incroase per additional unit of real investment. A decreaing trend measm a lower productivity, that is a less efficient use, of capital. Source: Peru - Economic and Sector Reforms to Sustain Stabilia*tion and Lay the Foundation for Development, Green Cover Report, (No. 10301-PE, Februy 1992). ing companies and the Banco Agrario. However, prises play an important role in the economy and administrative inefficiency and operating costs their poor performance is a major cause of the were high and medium and large-scale fatmers in country's disappointing economic and financial the better off coastal areas received the bulk of the recod. subsidies. These policies failed to promote agdcul- tural growth. From 1970 to 1990 agriculture grew 1.8 Mainly as a result of these bad policies at only half the rate of population providing little and the overexpansion of the state, the perfor- opporunity for an improvement in rural incomes. mance of the Peruvian economy after the 1960's In particular, production has stagnated for the pfn- was poor. The growth of output slowed so that by cipal crops grown in the sierra - potatoes, wheat the late 1970's and into the 1980's it was well be- and white corn. The policies also contributed to a low the rate of increase of the population. Invest- worsening of poverty. Better off frners were the ment productivity dropped steadily and inflation- ones who received the subsidy. The poorest farm- ary pressures mounted (Fable 1.1). ers, however, paid a net tax because they suffered the consequences of the worsening of the agricul- Eoonomnk Crisis tural terms of trade, but did not have access to credit, water and pricing subsidies. 2 1.9 President Garcia's explanation of chronic inflation and low growth was that Peru was in a 1.7 Domestic regulatory policies provided "debt trap": servicing the external debt would ac- special privileges to incumbents. The proliferation celerate devaluation and inflation, erode domestic of public institutions over the last two decades was savings, and curtail investment. Consequently, his accompanied by a sustained increase in public em- admiisraton (1985-90) put a ceiling on foreign ployment. In Pem today the public sector employs debt service of 10 percent of the value of exports, around 1.3 million people, dmost half of the non- and later stopped payments altogether. It instituted agricultural formal labor force. The number of widespread foreign exchange controls on the cur- public enterprises rose from 30 in 1968 to over 180 rent and capital accounts, with multiple exchange in the late 1970s, and today is 133. These enter- rates which were frequently changed. Protec- tion was also strengthened. By late 1987 foreign 2. Foradiscssoanofthepgiumactrofagiutand exchange allocations were being used to control an analysi of reent msfae er u - Agiultm Polcies for aU imports. A host of non-tariff barriers - import Ecnmiccincyq, (No. 10605-PBS),Setmber1992. monopolies, minimum-domestic-content rules, 3 and bans on second-hand imports, for instance - management and finances led to a decline in pro- supplemented the official negative lists. Tariffs re- duction. Relations with the international financial mained high and a variety of prefetrential schemes institutions and bilateral and commercial lenders - allowing half of imports to enter duty-fiee - were suspended because of the accumulation of benefitted selected sectss and firms. To offset the large arrear Ihe government had to reduce public heavy protection offered to import-substituting ac- investment to historically low levels. Inflation con- tivities, non-traditional exports continued to enjoy tnued out of corol, further eroding tax revenues. heavy subsidies. The impact of these ptotective policies was to close the Peruvian economy: by 1.11 Economic mismanagement reached a cli- 1990 exports and imports were eight and seven max in 1989-90. In attempting to control inflation, percent of GDP. These policies also generated a the Garcia Administration fell into the trap of re- distorted set of incentives to the tradable-goods- current sporadic adjustments to administered producing sector. Effective protection rates to prices and wages followed by short-lived pnce manufacturing averaged around 80 percent by freezes and other ineffective measures, while fiscal early 1990 and were quite variable. The complexi- and monetary imbalances kept escalating. The ties of import protection and export promotion led country's fiscal base almost vanished and most to enormous discrimiaton and use of discretion, public sector prices and tariffs approached zero in not only between sectors but also between firms real terms. The fiscal imbalance, including Central within sectors. Bank foreign exchange and financial losses, sur- pased 10 percent of GDP in 1987 and 1988 in 1.10 The Government also increased the mini- spit'e of a steady decline in Goverwment expendi- mum wage, expanded credit and subsidies, de- tures after 1985. By late July 1990 prices were in- creased the value added tax rate and lowered pub- ceasing at an annual rate close to 36,000 percent. lic sector prices. This strategy led to a high and in- Hyperinflation brought about a collapse of finan- creasing fiscal deficit, financed by money ceation. cial intermediation as shown by a fivefold increase While the initial results were excellent, the in the velocity of circulation of money between "boom" proved to be uinable. After 1987 the 1987 and 1990. Crable 1.2) market lost confidence, inflation rebounded and economic output decined shaiply. In key sectors, 1.12 The distorted and continually changing in- such as petroleum and mining, the breakdown of centive system - with as many as 11 exchange TABLE L2. PERU: INDICATORS OF CONOMIC CRIS 1987 1988 1989 1990 Gmwth of GP (%) 10 -7 -12 -4 inflation (%) (end of peiod) 114 1722 2775 7650 Publicsectordeficat'(%OFGDP) 11 13 8 7 oevelocf*ryofmoney2 8 16 24 42 1. Includes non-financial public setor and Central Bank sses 2. xcludes dollardeominations depoit Soure: Peru - Economic and Sco Reforms to Susta Stabilization and lay the Foundation for Deveopment, Green Cover Report (No. 10361-PE, Februy 1992). 4 TABILE 13. COMlARATVE SOCIAL INDICATORS IN SELECWED COUNTRIES Infant Under 5 Fertiloy Primy Seconday Pet Ca%ts Mortaity Mofality Life Rate School School GNP RaFt Rate Expancy (Births Per Enrollment Enrollment Coutry (US$ 1989) (Per 1,000) (Per 1,000) (Years) Women) % % Argetina 2,160 30 36 71 2.8 110 74 Bolivia 620 106 165 54 5.9 91 37 Chile 1,770 19 27 72 2.6 102 74 Colombia 1,190 39 50 69 2.9 114 56 Dominican Republic 790 62 80 67 3.6 113 47 Ecuador 1,020 61 85 66 4.1 117 56 E Salvador 1,070 56 90 63 4.7 79 29 Guatemala 910 56 97 63 5.5 77 21 Honduras 900 66 103 64 5.3 106 32 Mexico 1,990 45 S1 69 3.4 118 53 Source: 'Social indicaors in Latin Amerca and the Caribbean: A Compilation of Satstis from 1970 to the Present" by Gemp Psanopoolos mand Bill Wood, a view from LATHR, No. 23 and Wod Bank Development Report, 1991. Data ae for 1989 or, if not available most recent year (pre-1989) fates. widespread price contrls, 15 import tariff gional and ethnic discrimination. Progress in im- levels ranging up to 160 perce - together with the proving health indicators has been slow. In the recessionay efects of hyperinflation itself - led to case of infant mortality - one of the prime indica- an unprecedented decline in production. By July tors of a nation's health - the improvements i990 real GDP had plunged 25 percent since 1987. achieved by Peru were one of the lowest in the re- Investment, both public and private, was ex- gion even though it started from a less favorable tremely depressed. The country's inrastructure ps T 1991 cholera epidemc demonstrated had detenorated severely because of iappToptiate in a dramatic way the precariousness of health and imvestment and iadequate matenance. Dispos- sanitary conditions nationwide. Since its appear- able intrnational reserves had been exhausted. In ance in February 1991 through June 1991, 223,00 addition, violence and tenWrism were escalating. cases were reported, one of the most serious epi- demics of this century. in education, Peru ranks Socal Cris near the top measured in terms of primary and sec- ondary enrollment ratios. However, a gross pti- 1.13 SOCIAL INDICATORS. A compatisn may enrollment ratio well in excess of 100 (a situ- of social indicato among countries in the region ation that has peristed for some time) is indicative shows that Peru ranks near the lowest in most ar- of relatively high repetition rates (see Chapter 3 for eas related to health (Table 1.3). However, poor further discussion). economic performAne does not explain all the dif- ference because in many cases Peru falls below even countries whose per capila GDP is lower. For exape,the infant mortality rate is higher than 3.'oet Vqand Inquality in Lti ADeic and theCrbba emimple, d infant mrWity Me i higba dw During the 1970's and 1960s: An Overview of the would be expected given its level of per capita in- Evidence', Dominique van de Wae, pa 7, a View from come? Other facts include long-standing re- tATh No. 22. 5 TABLE 14 PERU: STRUCTURE OF CENTRAL GOVERNMt SPENDING, 1970.1990 (% OFTOTAL SPENDING) 1970 1975 1980 1985 1990 Crent 62.6 61.9 49.8 43.0 493 (ExcilIt. ) of which: Wages 28.7 24.9 17.5 16W6 13.9 Goodsandservices 5.3 4.6 2.6 38 49 Defense 1S.8 19.3 17.5 14.9 12.5 Capital 20.5 21.3 192 115 83 Debt paymen (Amort. & Int.) 17.0 16.8 31.0 45.5 424 Total 100.0 100.0 100.0 100.0 100.0 Memorandum ltems Govt spending(% of GDP) ExcI. socal secity 17.1 19.7 22.9 235 144 I socil seuiy 18.7 21.6 25.0 25.1 n.a. Index of real Govt eding (1987_100) ExcL oascuri 57.0 87.0 1170 112.0 41.0 IncL social secuity 56.0 86.0 114.0 107.0 as Souce: Govermme of Pem staff estimates 1.14 SOCIAL EXPENDITURES. The public were 65 percent lower than the 1980 level and 30 resources avaiable for socia srvices in Penu have percent below the 1970 level. bem scacer with the sharp decline in overall Government expenditues duirig the last five 1.15 Changes in the structure of expenditures years. The declne is explaid by several fictors give sorx indication of the competng demands on including the severe rwession and the nea vanish- shrnking resources Wages accounted for nearly ingof the country'staxsystem-in 1989tax rev- 30 percent of spending at the begining of the enues totaled only 4 percent of GDP. Central gov- 1970's, but had fallen to about 20 percent by the eomient spending was equivalent to 20 pecent of end of the decade. In 1990 wages accounted for GDP during the 1970's, rose slightly during the only 14 percent of total expenditures. The share al- first half of the next decade, but by 1989-90 its located for goods and services remained stable at share had dropped to less tan 15 peent of GDP, 4-5 percent of total spending except for the late low in mparion withother Latin American and 1970's and early 1980's when it dropped to about middle-income developing countries. By 1990, 3 percent. However, the share going for capital ex- central govemment expenditures in eal terms penditu fell from about 20 percet during most of the 1970's to about 15 percent in the 1980's and to only 8 percent in 1990. At different points of 4. A-bdesciponofthpovioofscasvicesbytb time defense and/or debt service represented large pivate act is induM in Anua . shares of total spending the former durng the 6 mid-197l 's and early 1980's and the latter in the capita spending on education has fluctuated con- mid-1980's and again in 1990 (Table 1.4). siderably, but in general increased from an average of $26 in the 1970's (with particularly high expen- 1.16 How did central government expenditures ditures during the middle of the decade) to $34 be- on the social sectors fare? The data indicate that tween 1980.86 before falling to $25 in 1989-1990. the social sectors were somewhat protected from C(able 1.5) the most severe expenditure reductions. Neverthe- less, because of the decline in overall resource 1.17 Real central government spending in Peru availability, Peru spends less than its neighbors in fell consistently between 1984 and 1990. In order these areas. In the case of healkh, its share of cen- to see how vulnerable the social sectors were to tral government expenditures has remained fairly budget austerity a coefficient of vulnerability was stable at 4-5 percent since 1970, equivalent to calculated. (Table 1.6) This is a simple ratio of the about 1 percent of GDP.- On a per capita basis, percentage changes in sectoral expenditure to spending by the central government on health in- those in total expenditures or the elasticity of creased from about $5 at the beginning of the sectoral expenditures with respect to the govern- 1970's to $13 in the early part of the 1980's. Al- Ment expenditures calculated only for observations though there have been some fluctuations, in gen- in which government expenditures are falling.6 In eral there has been a declining trend since 1986 the case of health, the coefficient was 0.5, indicat- with per capita expenditures standing at $8 by ing that on average health expenditures decreased 1990. The WHO estimated in 1981 that spending by about half as much as total expenditures. The of US$10 per capita could achieve prmary health annual data show that while in 1985-86 health ex- care for all, showing how constrained government penditures continued to expand in real terms, in health expenditures are in Peru. The Government's 1987-88 they were subject to slighty less or pro- emphasis on education appears to have lessened portional spending reductions, and by 1989 they somewhat. In the first half of the 1970's expendi- were experiencing cuts that were about 20 percent tures on education accounted for between 17-19 greater than the average for total central govern- percent of total central government spending. ment expenditures. In 1990 health expenditures However, this dropped to about 13 percent during were reduced three times as much as were total the last half of the decade and the 1980's. Mea- expenditures. The treatment of education has fluc- sured as a share of GDP the figures tell a similar tuated, although the coefficient of -0.4 indicates story. In the first half of the 1970's education ex- that on average spending expanded in real terms in penditures were equivalent to 3.5 percent of GDP. spite of the decline in overall central government This share dropped to 2.5-3 percent thereafter. Per spending. However, this is due to a sharp increase in expenditures in 1986, while in both 1985 and 1987 education suffered larger than proportional s. Healhexpendituresdonotincludesoecurty.A.nanalysis reductions in spending levels. In 1988-89 educa- of the social secudty system in Peru is outside the scope of tis tion suffered spending cuts which were lower than paper. Howevm, analysis of social secuity SY s i Lati the average. In 1990, education expenditures were America indices that generally the poor are excluded fom the subje to larger than propotional (th times Stn, althou dependg on the incidence of the tx wM subject toelarg tha portional (thrs time finance socalsmcity, the poor may bar some of tem Dta higher) spending cuts. For the social sectors as a for Petu show that social scuity covage in poor prin is whole, the coefficient (.0.2) shows that spending negigible. (see -Social Secouity m Latin A :erc Issues and increased in real terms, in contrast to the rest of the OptionsfortheWorldlBank"byMcoevy,WoildflnDiscusson Papr, No. 110.) nfe W one pyMv by tbe skcmty govermment. While this is primarily a result of systm in Per are also concenuated at the terdaay lve o spending decisions made in 1986, for two of the hospitals. Of course, even if the poor are excluded fom sos remaining four years (including 1985 and 1988) security, they may be affectd by cha_ in it. For example, _I the reductions suffered by social services were worker lose social security benefits becaw they woak in the infon economy or are laid off from their jobs, tbey and their families wiU have to tur to the hat sevies provied by tbe Minisuy of Health. This could reduce the resoure available for 6. For methodology see Hicks and Kubick (1983), "Cutting programs for the poor. The role of the social security system in Government Bipendire in UDCS.' Finance and healtbcnPasanditsfislsSladbsai ariadinA eA. Develpment 21:37-39, 1984. 7 TAIBLE LS. PERUt SOCIAL SECTOR SPENDING, 1970.1990 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Slweotoal o peaal (S) HMealh 5.5 49 S.1 43 4.5 4.7 S.4 4.0 4.5 48 Edlio. t18.8 1 18.0 185 18 182 175 16.8 13.7 11.6 123 Total 243 22.9 23. 22.9 22.7 222 22.2 17.7 6.1 17.1 Hualth 52 53 6.2 6.4 7.7 10.1 10. 7.9 6. 89 Educados 17.7 19.8 225 27 31.4 37. 34.1 27.1 17.7 22.7 Totd 22.9 25.1 28.6 343 392 47.7 44.9 34.9 24.5 31.6 Shwe of GDP(%) HMal 0.9 09 1.0 0.9 09 1.1 09 1.0 1.0 1d_cMlo 3.2 33 35 3., 3.4 34 4 3.0 2.6 25 lbTow 42 42 4.5 4. 6 4.4 45 3.9 3 35 I960 1981 1982 1983 1984 1965 1966 1987 96 19 1990 Sham of t tota uealg (%) Heddt 4.7- 5.1 4.4 43 43 44 4.7 48 4.9 4.4 32 Wmmtioa 133 14.9 13.7 12.1 11.9 11i 16.4 126 13. 130 9.7 To.al 18.0 20.0 18.1 164 16.2 16.2 21.1 17.4 17.9 17.4 12.9 HUa 12.7 15. 12.4 107 14 7.9 10.2 95 10.0 8.6 83 1d_ctIo 35.7 44.9 389 30 287 213 35. 25.9 26. 25.2 2.0 Total 484 60. 513 40.7 39.1 293 4S.7 35.7 369 33.7 33.3 SHARBOPGDP(%) 22.9 21.6 21.0 24.6 246 235 213 182 M5 132 14.4 Health 1.1 1.1 0.9 1.1 1.1 1.0 1.0 0.9 0.8 0 05 Bdaca 3.0 3.2 2.9 3.0 29 2. 35 23 2.0 1.7 1.4 Toald 4.1 43 33 4.0 4. 43 4S 32 2. 23 1.9 Smwoe: GM at of Pan d otaff .admtea TABLE 1. PERU: COEFlCIE S OF VULNERABILITY, 1985-190 1985 1986 1987 1988 1989 1990 AVERAGE Health -13 -1.6 0.9 1.0 12 3.1 O.S Education 1.7 -12.8 3.6 0.9 1.0 2.9 0.4 Total social sector 0.9 -9.8 3.0 0.9 1.1 3.0 42 Source: Staff estimates. TABLE 17. GOVERNMENT SPENDING ON EDUCATION AND HEALTH (% OF GDP) EDUCATION HEALTH TOTAL 1975 -79 1980- 85 1989* 1975-79 1980- 85 1989* 1975-79 1980-85 1989* Arentina 2.8 3.1 1.9 0.5 0.4 0.6 3.3 3.5 2.5 Bolivia 3.8 3.2 3.1 0.4 0.7 Una 4.2 39 Dna Chile 3.7 5.0 3.6 22 2.9 a 5S.9 7.9 na Colombia 2.2 2.7 2.7 0.8 0.8 n.a 3.0 3.5 1.8 Dominin Republic 2.1 2.1 1.5 0.6 IA 1.0 2.7 3.5 2.5 Ecuador 3.7 4.3 2.8 0.9 1.9 0.9 4.6 6.2 3.7 El Salvador 3.4 3.7 n.a 1.3 1A na 4.7 5.1 na Guatemala 1.7 1i nua 0.8 1.1 1.0 2.5 2.9 nLa Honduras 3.6 4.0 4.9 1.0 1.6 2.2 4.6 5.6 7.1 Mexico ~ 1.0 3.5 2.1 0.6 0.3 0.3 5.0 3.8 2.4 Average (Unweighted) 3.1 3.3 2.7 0.9 1.2 1.0 4.0 4.5 3.7 * 1989r amost recentdata available post-1985. Sour: Govemment of Peru and "Government Expendi on Social Sectors in latin America and the Caribbean Stisial Trends', by Hongyu Yang, A view from IATMR. No. 13 slightly less than the cutbacks in total spending, lhe Economic Reform Prorm indicating that thes secors were protected. 1.19 In August 1990, the Fujimori Govemment 1.18 Comparing Peru with other countries in launched a sweeping stabilization and structutal the region shows that in education, central govern- reform program.7 During the first stage, the gov- ment spending as a share of GDP was about aver- emnment took dramatc steps towards stabilizing age between 1975 and 1980, but dropped below the average thereafter, slightly during the first half 7. Thais section diaws on the Presdens Reports for te Trade of the 1980's, but significantly by the end of the Pohcy Reform Loan (No. P5666-PE, January 19) and the decade. The same is true for health (rable 1.7). sa Ao. 9 the economy and rebuilding ties with the intema- fiscal balance. It is also vital in order to guarantee tional fincial commumnity. The main components the Government's ability to provide basic social of the program aimed at eliminating the chief services in the long-run. The Government has source of hyperinflation - the monetary financing implemented a new tax system based on five types of the fiscal deficit. A tight domestic credit policy of taxes on: income of individuals and corpora- was maintained. The govemment placed strict con- tions, wealth of firms and individuals, value- trols over public sector wages and salaries, in- added, selective consumption, and imports. Ex- creased fuel prices by about 30-fold and tariffs for emptions have been reduced and rates lowered. Al- electricity, water and telephone services by about though the average import tariff rate has been low- ten-fold. Price controls were significantly reduced ered, other actions have been taken which are ex- Several tax exemptions were eliminated and some pected to result in an increase in net trade taxes. emergency taxes introduced. Strict cash controls For example, many preferential regimes, as well as were placed on central government finances. One export subsidies, have been eliminated. The of the first measures of the new Government was agency which administers taxes is being reorga- to liberalize the foreign exchange market and abol- nized and it has been given funds to purchase isb foreign exchange controls. The exchange rate equipment. was unified and a managed float was introduced. 1.23 The growth in urban employment and 1.20 A second stage of reform began in March wages is a major determinant of the pace of pov- 1991 and was based on a series of broad-based erty reduction through both its direct influence on structural measures. These reforms aimed at pro- the existing urban poor and through the opportuni- moting competitiveness and deregulating eco- ties it creates for migration from rural areas. The nomic activity The tax regime was simplified and growth of urban employment is especially impor- administration is being strengthened. The trade re- tant in order to alleviate poverty in middle-income gime was liberalized. The ngid labor stability laws countries such as Peru. Also, Peru's resource en- were amended to afford provisions for layoffs. dowments and climatic conditions are relatively Land property rights were broadened and strength- unfavorable for agriculture. Despite the heteroge- ened. The Government also has taken action to re- neity of ecological zones and a variety of crops, duce the size of the public sector and has continued only 5.9 percent of the territory of the country can to adjust public sector prices, while strictly con- be counted as arable land. The per capita availabil- trolling public sector wages. ity of cultivable land (0.14 hectares) is even lower than that of Asia and one-third the averge for 1.21 Because the successful implementation of South America. this economic reform program would lay the base for sustained and open growth, it is the heart of the 1.24 The demand for urban labor depends poverty alleviation strategy for Peru. Most of the partly on government policy toward the markets poor in developing countries depend on income for goods and capital as well as on policy toward from labor - from wages, from work on their land, the labor market itself. Often industial protection or from other self-employment. The countries that reduces both the level and growth of labor and the have succeeded in reducing poverty over the long formal sector. As a rule, the greater the degree of term have encouraged urban employment and rual protection, the greater the capital intensity of pro- development, thereby increasing the returns to duction. Greater neutrality in the trade regime can wage labor and small farm production. The follow- support a more labor-intensive pattern of industial ing section highlights the major components of the expansion in import-competing as well as export- Peruvian adjustment program, focusing on those ing sectors. The Government has moved quickly aspects which could make the largest contribution and boldly to free the trade regime. By September to poverty reduction. 1990, the number of import tariffs had been re- duced to 3 - 15 percent for basic foodstuffs, medi- 1.22 Peru's ability to reverse the sharp decline cine, some interm- -hate and capital goods, and in tax revenues is central for the restoration of some foods, 25 percent for other producer goods, 10 and 50 percent for other conumer goods. By then bargaining negotiation would improve labor-man- vitually all the preferential regimes also had been agement relations, to the ultimate benefit of all eliminated. In December 1990, the Govemment parties. The Fujimori Administration has recog- amnounced a timetable to cut tariffs every six nized the importance of reducing labor market ri- months to arrive at a flat 15 percent tariff by Janu- gidities which would be likely to hinder the pro- ary 1995. In March 1991 the Govemment reduced cess of structural adjustment. Thus the Govern- the 50 and 25 percen rates to 25 and 15 percent. A ment has begun to take some actions in this area. It variable-surcharge scheme designed to lead to a has extended the possible probationary period after landed price no higher than the previous five-year which labor stability regulations are in force. The average c.i.f. price plus a 15 percent tarff covers guidelines on the use of temporary employment some agricultural products (dried milk, wheat and also have been broadened, as well as the number of wheat products, corn and sorghum, rice, and reasons that would justify dismissals. The Govern- sugar). The Government also has taken strong ac- ment has improved occupational mobility in the tion to reduce non-tariff import barriers. By Sep- labor market by further increasing the tenn for la- tember 1990, aU import prohibitions, historically bor contracts, eliminating the legal constraints to the major import barier, had been suspended. Lo- part-time employment and extending the proba- cal content regulations have been eliminated for tionary period to one year. assembly industries and several state monopolies have been abolished. The Goverment has begun 1.27 In most countries incomes are generally to allow some second-hand imports including ve- lower in rual areas and thus rural development hicle and machinery imports. Clothing, shoes and plays an important role in poverty alleviation. Peru laundry items are still banned. Many quality con- is no exception. Policies to promote growth in ru- trols on imports also have been eliminated. ral areas will be an important component of the poverty alleviation strategy. The new administra- 1.25 In general, based on the experience of tion has taken several measures in this area. The other countries, trade reform can be expected to newly established unified exchange rate eliminated lead Peru to a more efficient use of its resources the bias against agricultural exports and imports of through specialization in productive areas where foodstuffs no longer receive exchange rate subsi- its comparative advantage is greatest and through dies. The trade reform also eliminated the wide- the competitive pressures that freely available im- spread system of exemptions that discriminated ports will exert on domestic producers. Labor against agriculture. Most significant have been the would tend to be reallocated within broad sectors liberalization and deregulation of all domestic and and overall employment opportunities would ben- foreign trade of agricultural products. The national efit from an expected acceleration in output, first rice marketing company is being abolished and the in agriculture and later in manufacturing. How- national input marketing company restructured. ever, trade reform is most effective if factors of Banco Agrario credit subsidies were elimin- production are free to respond to market forces. In ated. Land and property rights were strengthened, the case of Peru, state policies since the 1960s making land transferable and allowing it to be used have severely restricted factor movements. In or- as collateral. The Government also has begun der to promote more opportuities for urban em- a long-term plan ensuring land-titling and registra- ployment and thus contribute to the alleviation of tion. poverty, a key area for fmuther reform is labor mar- ket regulation. 1.28 Faced with poor performing state enter- prises, the Government has decided to reduce the 1.26 Changing the current laws to permit role of the public sector in the economy through longer labor contracts (not subject to labor stabil- the sale of public companies to the private sector. ity), longer probationary periods, and judicial re- The size of the central Government is also being forms would improve employment prospects. Less cut In the first four months of 1991, 50,000 civil detailed regulations and a less paternalistic ap- servants resigned under a program offering incen- proach tc govemment intervention in collective tives for voluntary withdrawal. 11 1nta Respowse of the Economy and Expected Conclusion Denefits 1.31 The major reason for the persistence of a 1.29 It is too early to judge the success of the high incidence of poverty in Peru is the dismal per- reforms which have been implemented and the formance of the economy. The legal and adminis- progam continues to be subject to high risks, par- trative structure discouraged growth. The economy ticularly because of the residual impact of the pre- became closed and not enough productive jobs vious hyperinflation and the difficulties it creates were created. The pubic sector became overex- for current monetary and exchange rate manage- tended and wasted resources. The poor economic ment. Nevertheless, there are some encouraging record is reflected in generally poor social condi- signs. Inflation has moderated significantly to just tions, although school enrollments continued to over 4 percent monthly between September 1991 expand in spite of the difficulties. An attempt to and May 1992 as compared to 60 percent during implement an unorthodox economic program in 1990. After tree consecutive years of decline, the the mid-1980's compounded these problems and economy grew by nearly three percent in 1991. caused output to plummet and inflation to surge. Although the process of adjustment resulted in a The Goverunent was forced to reduce spending to recession beginning the last quarter of 1991 and extremely low levels, although social services continuing during the first half of 1992, the were protected somewhat Nevertheless, the over- economy began to recover during the second half all scarcity of resources means that Peru spends of that year. In September 1991, Peru successfuly very little on health and education. In 1990 a new tescheduled part of its obligations to the Paris administration embarked on an ambitious stabili- aub. It awarded the Government exceptional zation and adjustment program. If this program is teatment in the form of unprecedented cashflow successfully implemented it should lay the base for relief between October 1, 1991 and December 31, economic growth which would broaden the oppor- 1992 (the consolidation period). tunities for people to improve their living stan- dards. The achievement of broad-based growth is 1.30 Stabilization is necessary for the success the first prong of a poverty alleviation strategy for of the structural reforms and to lay the- base for Peru. Lacking that, no meaningful reduction in growth. The revamping of fiscal administration poverty can be sustained. However, the poor al- and fiscal reforms should increase revenues. That ready have suffered from the economic stagnation and the Government's actions to reduce the state's and recent crisis. They were least able to protect role in the economy should permit more resources themselves from high inflation and likely to have to be devoted to basic services such as health and suffered most from reductions in key public ser- education. The trade reform should mobilize re- vices. They have not been able to benefit from pro- sources toward Peru's competitive advantage and tected market positions. Their incomes were al- lead to an outward-oriented, and thus sustainable, ready low and thus the recent sharp economic de- growth. Labor market reforms will improve the cline has affected the access of some households to flow of labor inputs among sectors so that the even an adequate diet. In order to protect the most economy can adapt to changes in relative prices vulnerable groups in the country the poverty alle- caused by trade and fiscal reforms and will pro- viation strategy must also address the particular mote a broader distibution of employment oppor- needs of poor households in Peru. tnities. 12 2 Poverd Proftk 2.1 The extent of poverty in Pr wsend s level wene classified as poor.1 Tne data pre- during the stagnation of the economy and recent setd in Table 21 shows that during the decade of crisis. Applying two nutrition-baed povery lines the 1970s the share of households classified as to a household suvey covering 75 pecent of the poor or extemely poor declined in Pe, although population, results in about half of the populon the country's record lagged that of other countries failing below the poverty line and a fiflh being in Latin America. In addition, while the extent of considered extemely poor. In order to desg pro- rural poverty diminished during this period (in line gams and policies to improve the lving condi- with overall trends for Latin America) the extent tons of the poor some basic informion is needed. of urban poverty rose substantially (in contrast to We need to know about their occupations, con- overall trends for Latin America). Between 1980 sumption patterns, economic activities and acoess and 1986 these gains in reducing poverty were to public services and assets. In order to provide completly wiped out and the trend of a poorer per- answers to these questions a povery profle for fomnce in uba relaive to rur areas continued. Peru is constructed. 2.3 Two studies have examined the change in Trends in Poverty 1970-199 the incidence of poverty between 1985/86 and 1990 for IlJma2 The estiMatS are not comparable 2.2 The United Nations Economic Commis- with those shown in Table 2.1 because of the use sion for Latin America anlyzed the extent and of different methodologies, including a different trend of poverty between 1970 and 1986 in several poverty line, and the narrower coverage. Both countries, including Per They estima0td a pov- studes used data from two Living Standards Mea- erty line based on the cost of a country-specific surement Surveys, one which was camed out in food basket which met interationally-set require- 1985/86 and the other in 1990. Special mention ments for energy and protein. Households whose needs to be made of the exceptional circumstances expenditures fell below this level were classified under which the 1990 survey was done. It was un- as extremly poor. This amount then was scaled up derlaken at the height of hyperinflation in Peru. by a factor to take into account non-food expendi- tures. Households whose expenditures fell below 2. -Povety and bequalty Duwig Unorthodox Adjuslment 'he Cue of Peru, 19&5-1990" by Paul Glewwe and Gillete Hall, 1. Fbr addidl information on the methdol nd sources UvlngStadard Measreent Study Woking Paper, No. 86 and used for this analysis see CBPAL 1990. A*ay Eceam& Faeliar, 19851990, Instituto Cuanto. 13 TALE 2.1. LATIN AMERICA: POVERtY ESTIMATES AROUND 1970, 190 AND 1986 (%OF HOUSEHOLDS BELOW THE POVWTY IN URBAN RURAL TOTAL 1970 1980 1986 1970 1980 1986 1E70 1980 1986 Latn Aca b 26 25 30 62 54 53 40 35 37 LatinAmerica 10 9 11 34 28 30 19 1S 17 (for Peru data above): Poverty line: d (1988 Prices) Natl Currency 123,985 140,892 140,892 83,530 94,920 94,920 US$ 552 627 627 372 422 422 Exptm poverty line: Id (1988 Prices) Nlat' curncy 61,987 70,440 70,440 47,731 54,240 54,2A0 USS 276 313 313 231 241 241 Per capita GNP (1980 prices) US$ 1,062 1,081 1,023 a. Poverty line based on cost of food basket needed to meet energy and protein requirements and an estimate for non-food expenditures. b. In addition to Peru, includes Argentina, Brazil, Colombia, Costa Rica, Mexico, Urguay and Veneuela. c. Extreme poverty line based on cost of food basket needed to meet energy and protein requirements. d. Percapita. Source: CEPAL(1990). Duing the oiO1t week suvey penod the increase PortY ProfIle in price level ranged between 1-5 percent per day. Derving a series of values in constant prces for 2.4 PERU LIVING STANDARDS SURVEY expenditures over the survey period alone is not (PLSS). The poverty profile for Peru is based on only very difficult, but the results are unavoidably information from a Living Standards Survey car- subject to more than the usual margin of error. Ad- ried out during October/November 19913. It cov- justing the data to make comparisons between ered households in four regions, Lima, Urban 1985/86 and 1990 is even more problematic. Nev- Coast, and the Rural and Urban Sierra, which ac- ertheless, although the precise magnitude of the count for about three-quarters of the popula- change and the poverty incidence rates are subject tion. The areas selected within the sierra region to a large margin of error, the direction of change were subject to security considerations. The survey is unambiguous. The studies estimate that poverty rose by between 3-4 times between 1985/86 and 3. mis analysis has benefited from an examination of several 1990 and the inaease in extreme poverty was even studies on povet (and related topics) which were based on the higher. Thes findings confirm what would be ex- information from the 1985/86 Peru Living Standards Survey. Several World Bank studies appeared as Living Standards pected in light of the trends in maconomic in- MeasurementStudy Working Papers. An annotated bibilography dicators, wages, etc. discussed in Chapter 1. of some of the work done in Peru appears in Annex B. 14 TABLE 2.2. PERU: DISUUlRIIION OF TOTAL EXPENDITURE BY DECILEs ALL SAMPLEAREAS Mean preapita Disttibution of Ratio of Food Expendituwes Decile Annual Expenditumes 1/ Expenditures to Total Expenditures (%) 4/ (New Soles) by Decile (%) Unadjusted 21 Adjusted 3/ Unadjusted 2/ Adjusted 3/ Unadjusted 2/ Adjusted 3/ 1 145 216 2 2 71 71 11 254 369 3 4 69 68 III 340 477 4 5 66 65 IV 424 578 6 6 62 62 V 505 688 7 7 61 60 VI 595 797 8 8 58 59 VI 709 941 10 10 56 56 Vill 879 1,146 12 12 53 53 IX 1,178 1.509 16 16 47 48 X 2,472 3,018 .3 31 35 38 Total 750 974 100 100 S8 S8 1. At first week October tAna prices 1991. 2. Household expenditures divided by household size. 3. Household expenditures divided by adult equivalents. 4. Within each decile. Source: 1991 PLSS genetally followed a format based on the World auveys. The processing time is also much shorter Bank's Living Standards Measurement Study than for other surveys making it particularly useful (LSMS) methodology. The measure of household in countries undergoing significant economic welfare is total consumption expenditures.4 There changes. However, three limitations of the data are several advantages of consumption as com- need to be kept in mind. One, expenditure mea- pared to income data. One, it better reptesents the sures of welfare are inherently partial because they welfare leveio of cettain groups whose incomes do not take into account factors such as health sta- are difficult to estimate, for example, the self-em- tus and access to public services. Thus expenditure ployed, including farmers and those working in measures need to be supplemented with a discus- the informal sector and those who benefit from in.- sion of basic needs. This already has been done for kind remittances such as food assistance. Two, the population as a whole and will be covered spe- since individuals are more sensitive to questions cifically for poorer households later in the report. about income than to those about expenditure, the Two, although the 1991 survey covers a signifi- latter data should be more accurate. cant portion of the population, the composite fig- ures are not representative of the entire country 2.5 The data from the Living Standards Sur- because certain regions were not included. In pre- vey includes a wealth of infornation that is not vious analysis, the incidence of poverty in two of generally available even in extensive household the regions not included in the 1991 survey, the coastal and selva rural areas, was similar to that in 4. For a discussion of this approach and the LSMS methidology the sierra urban area. (See Table 2.3 for current se 'The Distributiot of Welfare in Peru in 1985/86 " by Paul estimates of the incidence of poverty in the sierr Olewwe, tving Stadards Measurement Study Wofking Paper urbanarea the incidence of poverty in the ura No. 42. urban area.) The incidence of poverty in the utban 15 27 POVERTY MEASURES. Two poverty TAsL 23. lines have been calculated. Both are based on the PERu 1991 POVERTY HEADCOUNT capacity of a household to consume a basic food No. basket. Households are classified as extremely poor if their total expenditures are less than the Upper Povery Line (poor) 8,601 cost of a basic food basket. Households are classi- Lower povert LinM (extmly poor) 3.476 fied as poor if their total expenditures are less than Populatio Covered by Survey 16,024 the cost of a basic food basket plus an estimate of (TTAL POPULATON OF PERU) (zooo) non-food expenditures. In classifying households as extremely poor or poor, regional differences in 1. Headnount covers only sampled regions the cost of living and in the composition of the food basket have been taken into account.6 Ac- Source: 1991 PLSS cording to these definitions, out of the 16 million people in Peru covered by the sample, about 3.5 million people or about a fifth fall below the ex- selva, the other region excluded from the surve;', trme poverty line and an additiona 5.1 million was very low, and it accounts for a very small fall between the extreme poverty line and the share of the total population. The areas of the rual higher poverty line. Adding the two groups, sierra excluded from the survey because of secu- roughly half of the sample population falls below rity problems are some of the poorest areas of the higher poverty line Sable 2.3). Peru. Thus, the figures probably understate the ex- tent and depth of poverty in the rmal sierra. Tbrem 2.8 REGIONAL DISTIMBUTION. Where do in the context of a country in which many fear for the poor live? Among the four regions in the their personal security, it was very difficult to sample, the incidence of poverty is highest by far implement the survey for high-income households. in the rual sierra (Table 2.4) Two-thirds of the The information on the upper deciles of expendi- households living there are poor and 47 percent of tures is subject to more than the usual errors and the total fall into the extremely poor category. may be significantly underestimated. Only 10 percent of the households in Lima are classified as extremely poor, compared to about 20 2.6 Before looding at poverty, Table 2.2 pre- percent in both the urban coast and sierra regions. semts the disecfehtron of total expenditure by In each of these three regions the share of poor population decile, where decile I contis the households is about half. The rural sierra is esti- ponrest 10 percent and decile X the wealthiest 10 mated to contain the largest number of extremely percent ao the populatiio.The daaareprovidedb o poor (1.6 million). Because of its size Lima con- both an adjusted (consumption divided by adult tains the highest number of poor (3.2 million). equivalents)S and an unadjusted (consumption di- vided by number of household members) basis. 2.9 Table 2.5 provides information on house- The data show that households in the top decile hold size and per capita consumption for the ex- account for a third of total expenditures carped tremely poor, the poor and the rest of the popula- to two percent, four percent and five percent, re- tion. The typical poor person lives in a larger spectively, for the bottom three deciles. For the top household than the non-poor, on average larger by decile household, food represents 40 percent of to 1.5 individuals. There is little difference between tal expenditure whereas for the lowest three deciles the poor and non-poor household on the number of the share is about 70 percent. wage eamers, but because of the larger household each worker in a poor household supports 4 family 6. Ihe e-treme povaq yine (adjusted, per capita) ranges from 5. The methodology used is the same as Glewwe (1988). Adlts 430 new soks/year in the urban siera to 500 new soles/year in over the age of 18 are given a weigt of one, whie children aged Uima. Thepoertyne(adjusted,percapita)rangesfrom 700new 13-17, 7-12 and 0.6 are given weights of 0.5, 03 and 0.2, sols/year in the ra siera to 980 new soles/year in Lima. See respectively. Annex B for more details on the caklulation. 16 Emembers wherea for the non-poor the number PERU: REGIONAL DfSTRIBUTION F fills to about 3. On average, the value of per capita POPU:ATION BY DIOVERTIY GROU food consumption in an exlremely poor household is only 30 pecent (on an adjusted basis) what it is Region AU Non-Poor Poor in a non-poor household. n the case of total con- 40 44 37 sunption,the fracdon is20percenof the level for lima non-poor households In poor households the cor- 19 18 19 respondingf for food and to lconsmption Urba Coast are about 45 percent and 30 percent, respectively, 20 23 18 of the non-poor level. UrbnSierra_ Rural Sierra 2114 7210 As shown in Table 2.6, femade headed 100 100 100 housholds make up a smaller share of the ex- Total ____ A tremely poor and the poor compared to their share in the total popiuation. However, the mean per Region ADn Et mly Pow Ote capita annual expenditures (unadjusted) of a fe- male-headed household are only 15 percent greater than for a male-headed household. Fe- 40 19 46 male-headed households are found to a greater Lima 19 9 uextent in Lima, accounting for a fifth of house- Urban CA holds in the capital city. Contrary to the pattem in 20 17 21 other areas of the country, here female-headed Urban Sierra m households are found disproportionately among 21 45 14 the extremely poor, accounting for 26 percent of Rural Sierra WFNINWNER M the total. 100 100 160 Totall 2.11 Data on language and expenditure levels Source: 1991 PLSS indicate the disadvantaged position of the Indig- enous popution in Peru. Slightly over 60 per- cent of Quechua speakers are poor and a third of them are extremely poor. In the case of Aymara speakers, 86 percent are poor and 70 percent of TABLE 2.5. PERU: HOUSEHOLD SIZE AND PER CAPITA CONSUMPTION BY POVERTY GROUP Extremely Poor Poor Non-Poor All Household Size 6.0 5.8 4.3 5.0 Adjusted Household Size 3.9 4.0 3.4 3.7 No. of Wage Eamers per Houehold' 1.4 1.6 1.6 1.6 Food Consumption ($/annum) 132.1 205.9 509.5 369.3 Adjusted Food Consumpton ($/annum) 221.1 324.2 735.7 488.8 TotalConsumption ($/anum) 192.4 329.2 1,111.2 750.0 Adjusted Total Consumption ($/annum) 327.4 528.8 1,642.3 937.7 1. Includes only paid workers Notes: (Limg prices October 1991), new soles Source: 1991 PLS 17 TABE- . TABLE27. PERU: SEX OF HOUSEHOLD HEAD PERU: DISTRIBUTION OF THE POOR BY AMONG THE POOR LANGUAG1: OF INTERVIEW sex remely Poor Poor All Edmic Poor (of which: Non- .roup Extemdy Poor Total Male 88 8S 83 Poor) Female 12 1S 17 Spai 42 (13) 58 100 Source: 1991PLSS Quechua 62 (34) 38 100 ___ __ ___ _ Aymaa 86 (70) 14 100 Souc: 1991 PLSS them are extremely poor. Taken together these households account for 40 percent of the ex- tremely poor and about a quarter of the poor, com- food by the poor. The commodities accounting for pared to their share in the sample population of the largest share of expenditures are rice, bread, slightly under a fifth. sugar, tubers and meat. Consumption from own production is substantial only among the poor in 2.12 The age of the head of household does not the rural sierra (among the regions sampled) appear to be strongly correlated with poverty. (Fable 2.10). For both the poor and the extremely Based on the total sample, those aged 26-45 are poor, slightly over half of the value of food con- somewhat overrepresented among the poor. Older sumption is accounted for by own production on heads of households are consistently average in the rural Sierra The products for which unrderrepresented among the poor. In Lina, mi- own production accounts for the largest share of grants are only slightly more likely than non-mi- consumption are chicken (90 percent) and dairy grants to be found among the extremely poor and products, tubers, meat, vegetables and eggs (70-80 the poor. About 44 percent of the residents of the percent). There are only marginal differences in capital are migrants. the pattern among the extremely poor. For these products, the poor would be insulated from 2.13 EMPLOYER. The poor are found largely changes in market prices. It should be pointed out among the self-employed. The unemployed have that the sample survey does not include the areas in the highest incidence of poverty followed by the Peru where rice and sugar are produced. The self-employed and private workers. Reflecting the coastal rural and the selva regions account for most extent of the Peruvian economic crisis, about half of this production. However, previous studies have of all households headed by a self-employed or shown that these farmen are generally better-off private worker are poor. The self-employed are than sierra farmers because they are more com- better off than private workers in the sierra The mercialized and these products generally have opposite is true in Lima and the urban coast. In been protected by the Government. Based on the spite of the sharp decline in public sector wages, survey data, the poor would stand to benefit from the incidence of poverty is lower among these declines in the price of wheat, rice and sugar as a workers. Thus the poor would not be dispropor- result of a decrease in effective protection for these tionately hurt by reductions in public sector em- crops. ployment. Public sector workers are better off in Lima than in the other regions sampled. Although 2.15 Although the Government has eliminated in- it would be expected that the recent hyperinflation put subsidies and guaranteed prices for agricultural would have had an adverse impact on retirees, the output, for some agricultural products a scheme of poor are found to the least extent among this surcharges is applied. As of June 5, 1992, the sur- group. charges on wheat, flour and pasta ranged between 30-38 percent; rice and sugar received a 13 and 16 2. 14 EXPENDITURE PATFERNS. Table 2.9 percent surcharge; and yellow corn and sorghum lists the most important expenditures on purchased received a 17 percent surcharge. The equivalent 18 TABLE 24L PERU: Dbibulon of the Poor by Employer of Head of HOU.isbI| Employer All Extemely Poor Other Public Private Self-Employed Unemployed Non-Active 7 1 Other Total Employer All Poor Non-Poor J ~~~~~~~~~~~4 11 16 Public 22 22 22 Private Self-Employed Unemployed _ 1 _ Non-Active 785 Olher _g* 100 10010 Total__ Soce: 1991 PLSS percentage surcharges on dairy products were 34 dairy products, the poor may benefit from the percent for powdered milk and for anhydrous milk scheme. Purchased dairy products account for a fat.7 What is the impact on the poor of this lower budget share for the poor relative to the non- scheme? For several products- sugar, wheat flour, poor and poor farming households consume pasta and rice - the policy would appear to hmt the largely their own production. The impact of the poor. These items account for a higher budget surcharge on yeiow maize and sorghum is consid- share for poor households relative to non-poor ered in paragraph 2.21. households and even poor fiuming households are net purchasers of these products In the case of 2.16 Table 2.11 lists the nine most important non-food expenditures for the sample population. 7. For folr tament of the surge scheme see Peru- For the poor the most important expenditues are Agiult Poles for Enomic Effciency (No. 10605-PB, detergents, public transportaflon, soap, and cloth- September 1992)2 ing. in Lina, the poor spend more on public trans- 19 portation (slightly over 20 percent of non-food ex- PRRU-. TO D LE r.o9m penditure) than in other regions. In the sierra re- GtoUP Vgion, on the other hand, expenditure shares are higher for consumer goods such as soap, detergent, and clothing. Although the poor stand to benefit Eicrmely Poor Non- from any price decreases in these commodities re- po"r Poor sulting from deregulation and trade liberalization, Rice 2 13 11 8 a subsidy would be well-targeted to the poor only Bread 2 11 11 8 if tbey consume more than the rich in terms of ab- Sugar2 9 7 4 solute quantities. None of these items meet this test Tubers 8 7 6 because for all the products the proportion con- Meat 7 a I sumed by the non-poor is greater than the propor- Oil 6 5 3 Beans 6 6 6 tion of the non-poor in the population. Chicken 5 6 7 Noodles 2 2 . 4 17 Information on the characteristics of the F dibSS 4s housing of the poor gives some indication of the DairyProucs 4 6 8 Vegebles 3 3 3 distibution of public services such as water, sew- Others 19 21 31 erage and electricity. As well as being important measures of welfare, some, such as source of Total 100 100 100 drinking water and sewerage, have important im- 1. P_Shadu fod only, exudes _-omp plications for health status. Only slightly over half own production of extremely poor households have access to a 2. Covered by the erumWe surcarge sdcm public water systern, compared to 80 percent for Soul : 1991 P1.S the total sample. The rest of the extremely poor are dependent on either wells or rivers/springs. The extremely poor who do have access to a public water system have been more affected by cutbacks in water supply than the rest of the population. In TAKLE2iQ the rural sierra less than half of the population has PERU: FOOD CONSUMPTON OF POOR access to a public water system, compared to 90 HOUSEHOLDS DY TYE OFACQUISTON percent in the other areas covered by the survey. IN RURAL SIERRA Purchased own Production 2.18 Less than 30 percent of the extremely poor have public sewerage service, compared to slightly Rice' 86 14 over 60 percent for the total sample. The rest are Breadw 84 16 either dependent on latrines (40 percent) or lack Suar 93 7 facilities (30 percent). In the rural sierra the low Meat 33 67 access of the population (8 percent) to public sew- oil 94 6 age service is even more striking. The poor use BMW 71 29 gas/oi/kerosene for lighting more frequently than Chico3 11 89 wealthier households where electricity dominates. Noodba 92 S For cooking, the use of kerosene is common for Dairy Products 33 68 households of all income levels, but among the Vegetables 19 51 poor wood is even more widespread. Others 28 72 All 49 51 2.19 Educadon levels are strongly related to 1. Covrd by the Govneasurdargemsceme poverty. The percentage of heads of households with less than a primary education is relatively Sor: 1991 PLSS small (7 percent of the total sample). It is not sur- prising that two-thirds of these households are 20 TABE 2-1 PEWR% NO-FOOD EXPENDITURE PATTERN BY POVERTY GROUP AU emely Poo Othe 10 14 10 Public Tmnsportadon ------ 7 8 7 Clotbing (Adlt) _S_ _ 6 11 7 Soup, Shampoo,oo¢ 6 1S S~~~~~~~~~~ 5 Detegnmts FumininrHousehoM -upn 3 3 3 Shoes 3 03 Fuel and LubricaX Clothing(Children) _ 52 38 ... 5 Ohes 100 100 100 All All Poor Non-Poor to 179 Publc Transportation 7 7 8 Ckbdas(Adul) _ 6 ~~~~~~~~6 7 6 9 5 Soup, Shampoo, etc.l ___ | _ 6 10 S 4 1 .....t Iuehod EquipmentU IIIIUIIEUIU 3 -- ---- - 3 4-- --- ---- Shoes II_ 3 14 Fuel ad Lubcat 3 4 2 Clodt(Chiden 52 - 42 54 Others -------- 100 - ------------100 100 AB Source: 1991 PLSS 21 TARLE 2.12 PERU: PUBUC SERVICES FOR THE POOR (% OF HOUSEHOLDS) Extemely Poor Poor Total Rwal Siens Source of Drinking Water Public 55 70 80 Well 26 14 8 River/Sprig 14 9 7 Water Truck 1 4 3 Other 4 3 2 Hours of Public Water Suppy in Housebold 1-3 hours/day 21 18 15 46 hours/day 1S 14 12 7-12 hours/day 17 21 20 13 or more hours/day 47 47 52 Sewerage Public Service 28 49 63 Well-Septic 4 5 4 Latrie 40 23 16 None 29 23 17 Source of Ughting Electricity 49 71 81 OiaslO/Kerosene 44 24 16 Candle/None/Other 7 6 4 Cooking Fuel Electricity 1 1 3 Gas 4 14 28 Kersene 39 51 45 Coal/None/Olher 7 4 2 Wood 49 30 22 Sourc::1991 PLSS classified as poor. In the ual siea, however, the the percentages of poor and non-poor households share is double that for the total sample and the who own land. However, there is a significant dif- proportion classified as poor is about the same. ference in the amount of land owned. The poor About two-thirds of extremely poor households have roughly 50 percent less land than the non- are headed by someone with no more than a pn- poor. Irrigated land is more valuable than non-irri- mary education, compaed to about a third of non- gated land. About a third of poor households own poor households. Those who have not completed irigated land, compared to about half for the non- secondary education are more likely to be found poor. The poor household also owns on average among the poor than those who have finished sec- less irrigated land than the non-poor. Also, poorer ondary school. households in the rural sierra tend to have a greater proportion of workers engaged in agricul- 2.20 The incomes eaned by the rral poor de- ture than is the case for better-.ff hoseholds. pend in part on the land they own. Table 2.14 pro- vides data on land ownership among the poor in 2.21 The crops produced in the rual sierra by the rural siem ere is virtly no difference in the largest share of poor farm households are pota- 22 TABLE 2.13. PERU: EDUCATION LEVEL OF HOUSEHOLD HEAD Highest Grade Completed by Head Bxtremely Poor Poor Non-Poor Mean per Capita Anna Expenditure 1/ None/initial 12 10 4 430 Primary 55 47 30 543 Incomplete Seconda 14 14 12 633 Complete Secondary 16 21 27 808 Non-University Higher 2 3 7 969 Incomplete Unive-sity 0 2 4 1160 Complete University 1 3 16 1429 Total 100 100 100 874 Total Sample Rural Siera None/Initial 7 16 Primary 38 58 Incomplete Secondary 13 11 Complete Secondary 24 12 Non-University Higher 5 2 Incomplete University 3 1 Complete Univesity 10 1 Total 100 100 1/ All first week October 1991 Lima Prices, new soles Source: 1991 PISS toes, barley and wheat (Table 2.15). The crops which are produced by a higher share of poor relative to non-poor farmets ae barley, potato, oca PERU: AGRICUTURAL L OWNER and olluco (Andean tubers). Yelow maie and rice Pi THEIRURAL SIERRA are grown by a larger share of non-poor farmers, while wheat and white maize are grown about Poor Non-poor TOt equally among poor and non-poor farmers. Thus Total poor fumers would benefit from icaes in the price of potatoes or badey (or gains in pfitability). All Fam LAnd: As already mentioned, the suivey did not encom- Households owning land (%) 81.6 84.1 82.5 pass the area where nce gros However, acoding dh s o sn0i.9 . to the 1985/86 PLSS, the poor were not impor Ladwning household only 0.34 069 045 producers of this crop and it is unlikely that this has Irrigaed Land: changed.8 The Govermment's surchge on yellow Householdsowning land (%) 36 48.7 40.2 maize (see para 2.15) benefits largely non-poor Capita: farming households. Also, the production of sor- w ghum (also covered by the surcharge) by poor mmo item: farmers appears to be negligi'ble. Distribution of Rurwal Siera 67.8 32.2 100.0 Popuation s*ne poorin Lain Amaica duingAdjostment -A Case Study of Source: 1991 PLSS Peru,' by Paul Okwwe and Dens de Tray, lng Standards Measurement Study Woring Paper, No. S6. 23 thirds are poor. TABL 2.1S PERU: CROPS GROWN IN * Because of its size Lima contains the high- RURAL SIER8 A est number of poor. Crop Exreey Poor Poor Non-Poor Cm Ex_____ y_Poof Pow No__ _ 7* The poorhouseholdhasslightly more mem- bers than the non-poor household. As a w Maize mresult, each worker in a poor household % who fam 13 14 22 supports more family members. kg/capita 32 47 221 * Poverty is widespread among the indig- White Maize enous population. % who fam 9 10 9 kgcapita S4 73 42 Most of the poor are either self-employed Wheat ' or work in the private sector. The incidence % who fam 50 5s 50 of poverty is highest among the self- kg/capita 27 29 203 employed and the unemployed. Rice ' % wbo fam 3 3 S * Themostimnportantfoodcommoditiescon- kg/capita 656 787 2956 sumed by the poor are rice, bread, sugar, tubers and meat. Barley % whofarm 60 54 42 The most important non-food commodi- kgtcapita 37 40 180 ties consumed by the poor are detergents, Potato public htansportion, soap, and clothing. % who farn 69 69 63 kg/capita 111 139 444 * Only slightly over half of extremely poor Oca households have access to a public water % who farm 11 12 7 syskm. Less than 30 percent have public kg/capita 50 48 126 sewerage service. % who farn 8 10 7 * About two-thirds of extremely poor kg/capia 47 40 141 households are headed by someone with no more than a primary education. Those 1. Covered by the Goves surchrge sdCe. 1 who have not completed secondary educa- the case of what and ice ven famg ouseholds w tion are more likely to be found among the neAtpsdmm Crabk 2-10) poor than those who have finished sec- Soure: 1991 PLSS ondary school. * Among landowning households in the ru- Sumun ral siem, the poor have roughly 50 per cent less land than the non-poor. They are 2.22 TMe preceding sections have descrbed the also less likely to own irrigated land and characteristics of the poor. In summary, the most even if they do own irrigated land, on av- important conclusions of the poverty profle for erage, they own less than a non-poor Peru are: household. The incidence of poverty is highest in the * Poor households in the rural sierra have rumal sierra; nearly half of the households more workers engaged in agriculture than living there are extremely poor and two- the non-poor. 24 ing the rehabilitation or construction of The most important crops produced in the small-scale irrigation works. Measures to rural sierra by the poor are potatoes, bar. increase productivity of the crops most ley and wheat. The crops which are pro- important to the poor (barley, potato, oca duced by a higher share of poor relative to and olluco) would also be beneficial. non-poor farmers are barley, potato, oca Other measures are unrelated to agricul- and olluco. tural policies. For example, given the higlher dependency ratio of the rural poor Inipilcatlons for Poverty AUeviation Strategy and the low productivity of agricultural employment, these households would ben- 2.23 The broad guidance provided by the pov- efit from opportunities for non-fann work. erty profile for the design and components of a poverty alleviation strategy for Peru is summarized * In relation to the poor (as opposed to the below. extremely poor), the poverty profile indi- cates that most of these households have The extent of poverty in Peru is substan relatively good access to public services, tial. About half of the population surveyed including education. These households fall below the higher of the two poverty are poor because they are either in lines and a fifth below the lower cutoff. low-paying, low productivity jobs in the Given resource constraints and the need private or informal sector or unemployed. for fiscal discipline targeted programs What is needed to raise their expenditures should focus on the extremely poor. above the poverty level are more produc- tive jobs. And they are relatively well- 4 The incidence of extreme poverty in the equipped to take advantage of more em- rural sierra and among the indigenous ployment opportunities. For this group population largely accounts for the inci- what are most important are the execution dence of extreme poverty at the national of the economic reform program and lib- level. Thus, progams to alleviate poverty eralization of the labor market. among the extremely poor should target the rural sierra and the indigenous popula- * Based on consumption (and production) tion. These groups suffer not only from patterns, the poor would benefit from de- low expenditure levels, but also from low cdines in the price of wheat, rice and sugar access to public services, such as educa- as a result of a decrease in effective pro- tion and water and sanitation. Improve- tection for these crops. Since clothing is ments in access, particularly for education, an important non-food expenditure, the are needed to reduce poverty. These poor would gain from the elimination of households are also at greater risk for poor the ban on second-hand clothing imports. health because they lack clean water and Given the importance of expenditures on sanitation facilities. detergent and soap, the poor also would benefit from increased competition in the * The fact that working in agriculture is manufacturing or importing of these prod- positively associated with poverty points ucts, leading to a decline in price. to the need to look for ways to raise in- comes of fam households. Some possible * The surcharge scheme should be recon- measures relate to agricultural policies. sidered by the Govemment because, with Poorer farm households have less land the possible exception of dairy products, than better off households and the land is the poor are not benefiting from it. For less likely to be irrigated Reforms related some products (sugar, wheat flour, pasta to land titling should improve access to and rice) the poor are adversely affected land and there may be scope for promot- because even poor farming households 25 are not purchasers of the commodities and their living standards. Although less documented, because the items account for a larger good health status also has a role to play in en- budget share for them than for the non- abling people to improve their lot. The poverty poor. The surchage on sorghum and yel- profile has shown that the extremely poor in the low maize benefits better-off fams be- rual sierra are at greater risk for health problems cause they produce these crops to a greater because of low access to public water and sewer- extent than the poor. age systems. Thus, improvements in social ser- vices - education, health and nutrition - are critical 2.24 The poverty profile shows the importance for the poor. of education in enabling households to increase 26 3 Social Services 3.1 Social services can play a dual role in al- gaps in coverage, and the intensity and quality of leviating poverty. First, improvements in health, services is inadequate. There is also worrisome nutrition and education, direcy address the worst evidence of a decline in the demand for services. consequences of being poor. Second, there is In nurtion, food security generally has declined ample evidence that investing in human capital, for the poorest. Peru suffers from relatively high especially in education, attacks some of the most rates of child malnutrition and low birth weight. important causes of poverty. The programs which There are also micronutrient deficiencies in some have the greatest impact on the poor are primary areas of the country. The response to malnutrition education and health care. This section reviews has excessively relied on food assistance and given the status of services in education, health and nu- insufficient attention to complementary health trition, focusing on those activities most important measures, micronutrient supplementation, and the for the poor, and highlights the major issues con- promotion of better health and nutrition practices, fronting these progmms. including breast-feeding and chfld growth and de- velopment monitoring. There are also problems of 3.2 In education, there has been an impres- poor coordination among the agencies active in sive expansion in primary enrollments. However, nutrition, a lack of an overall framework for nutri- this has been coupled with a decline in expendi- tion interventions, an absence of norms and guide- hures per student and an exodus of trained teachers lines and weak nutrition surveillance. from the system. Repetition rates are high, par- ticularly in the early grades. In addition, there are Education wide disparities in educational attainment and ef- ficiency within the country. Another concern is Status of Services the persistence of a relatively high rate of Wit- eracy as little progress has been made in rual ar- 3.3 Peru expanded educational opportunities eas and among women. In health, in spite of an substantially during the last two decades. The expansion in primary care infrastructure, Peru has share of 6 to 14-year-olds attending school in- some of the worst indicators on the continent, par- creased steadily from 78 percent in 1972 to 89 per- ticularly in rural areas. Many of these conditions cent in 1991 according to Government figures. The could be improved with more concerted efforts in high proportion (97 percent) of each age cohort primary health care. Also, the full benefits of the who enroll in first grade on time (between ages 6 network of facilities are not being realized be- and 7) suggests that parents are committed to send- cause of the scarcity of equipment and the poor ing their children to school. However, during this distribution of personnel. In general, there are time the real level of expenditures on education 27 but the high repetition rate is an obstacle to univer- TABLE 3A. sal completion of primary school. It also creates PERU: WAGE AND BUDGET INDICES incentives for early dropout and is responsible for 1980 198S 1989 1990 a large degree of age heterogeneity in each grade which makes teaching very difficult. Students Teacbers Salares 100 66 24 - spend an average of 13 years in each grade so that Budget Index 100 86 39 26 by grade 6 almost three-quarters are overage. On Mm Wage 10 s 31 27 average, for each graduate the system spent re- c-uCollan 100 61 so 29 sources equivalent to 8.4 years of schooling, 40 White-Collar 100 80 60 31 percent more than what would be necessary in the absence of repetition and premature leaving. Source: Peru en Numeros, Cuanto S.A. 3.7 The high level of repetition in first grade seen in Peru is common in Latin America. To ad- generally declined. The decline in real expendi- dress this problem many countries have expanded tures on education, coupled with expanding enroll- the coverage of pre-schools. Peru has significant ment, resulted in a shatp drop in per student experience with pre-school education. There is an spending after 1985, from $175/student to about extensive network of formal pre-schools and non- $80/student by 1989-90. formal pre-school centers with strong community involvemen, (PRONOEI). About 70 percent of the 3.4 The impact of fewer resources on the population of 4 to 5 years old is enrolled in pre- quantity of educational services was ameliorated school. The proportion of children served by non- by the even sharper drop in the real level of formal centers increased from 15 percent in 1980 teacher salaries. Salary levels fell for most groups to 39 percent in 1989. However, evaluations of in Peru during this time, but by 1989 the decline non-formal programs suggest that, while they eperienced by teachers was greater than the drop work relatively well in the area of early childhood in the minimum wage or in the average wages for stimulation, they do not do as well preparing chil- blue and white-collar workers. In response, many dren to enter primary school. These centers are trained personnel left the teaching profession. As a mostly located in poor areas and are organized result, between 1982 and 1990 the proportion of more as day-care centers, staffed by volunteers uncertified teachers increased from 25 to 50 per- who have received litle training and lack the basic cent. teaching materials or facilities required to prepare children for school. Issues 3.8 National averages mask sharp differences 3.5 Access to prmaty education in Peru is al- in educational attainment and internal efficiency most universal. The main education issues related between regions and between urban and rural ar- to poverty are: (a) the high level of internal inef- eas. Departments with the lowest educational at- fclcency, in part explained by the poor quamty of tainment (percentage of students completing teaching; and (b) the signficant disparies tn Grade 6) tend to have the highest proportions of educational attainment and Internal effiiency uncertified teachers and schools with no electric- within the country. Table 3.2 summarizes some ity, water or sewerage. Based on 1981-88 data, the indicators of internal efficiency in primary educa- highest percentage of students completing Grade 6 tion. The impressive increase in enrollments has was the 85 percent recorded in Lima. The capital not been matched by improvements in educational also has one of the lowest percentages of attainment uncertified teachers (47 percent). At the other ex- treme, the lowest share of students (28 percent) 3.6 A comparison of gross and net enrollment completed Grade 6 in Ayacucho which has one of ratios over time suggests that there are enough the highest proportions of uncertified teachers (65 places to provide for all children 6 to 11 years old, percent). In Ayacucho it takes 15 years of school 28 TANA 3.2 PERU: INDICATORS OF INTERNAL EMCIENCY OF PRIMARY EDUCAlnON, 198 Evolut of GOss and Not Ewolment Ratio, 1960-1990 Eumflut RatIos 1960 1970 1980 1990 GrEssEollmnt Ratio 83% 105% 114% 118% Net Enrollment Rstio 77% 86% 87% Grades One Two Thino Four Fve Skn Total RepetitionRates 32% 21% 20% 16% 16% 6% 20% Over-Age Students by Grade Oneyearormore 32% 47% 57% 64% 70% 72% Twoyeamsormome 10% 18% 26% 32% 38% 40% ThreyYosmor mom 4% 8% 11% 14% 18% 19% Avenage#YearsperGrade 1.6 1.4 13 12 1.2 1.1 13 Summry Results Percentage who Graduate 77% P _cetage of Entering Ohort who Grauate without Repatig 22% Percentage who Graduate without Repeaing 29% Student Years Per Gradat 8.4 Average Number of Years in Pimary Eucaion 6.4 Average Number of Grades Completed 4.9 ibputOutput Ratio (Student Years per GraduaWYeas in Cycle) 1.4 Soures: UNESCO, Statistical Yearbook; Schiefelbein, E. and Helkkin, S. Peru Acoess, Repetitibo and Efficicy in Primy Education. OREALC, October 1991. resources per graduate from Grade 6, 25 times teaching practices there do naot differ substantially more than what would be required in the absence from practices in regular schools. Since most of of repetition and dropout. On the other hand, in these teachers have received very little training Lima it takes 7 years to produce a graduate, only they tend to use the objectives, contents, method- 17 percent more than if no repetition or dropout ologies and materials that have been developed for existed. a setting of one teacher per gamde, without adapt- ing them to the reality of multigrade teaching. As 3.9 The lack of textbooks and teaching mate- a result, teaching is of poor quality and much of rials is a serious constraint in multigrade schoos, the time spent by students is irrelevant. Most of most of which are located in rural areas. Few pri- these schools also lack furniture, have not been de- mary students have textbooks and schools have signed to meet the needs of multigrade teaching, little or no teaching materials to support teachers' have not been properly maintained and lack even activities. In the absence of textbooks, students at- basic sanitary facilities. tending multigrade classes are left idle or assigned irrelevant tasks while the teacher attends to stu- 3.10 The poor quality of primary education and dents in a different grade. Studies of conditions in signiicant intra-country disparities are reflected in rural areas and multigrade schools suggest that sudent perfomnce. While mo recent information 29 is not available, a 1981 study revealed that a large percentage of students reaching Grade 6 had not TABLEM3. mastered basic skills in mathematics, social sci- MORTATY RATE Y GION ences and natural sciences (See Statistical Appen- ( tOlvebhts) dix Table 1.13). Students living in the siea region and other ural areas performed the worst and Range those in Lima the best Since teaching conditions Avrage by Department have deteriorated substanutially in Peru durig the 1980s, both in terms of the amount of resources Amazona as allocated to educaton and the number of certified ACroqpa 73 teachers, performance today is likely to be even Chavin 87 lower. Gtau 94 72 96 Inca 123 88 126 3.11 A study of the academic performance of wae 101 62 131 Maniategn 105 73 114 students attending secondary schools in Lima pre- MaoaIs 87 73 95 sents a similar picture. A large percentage of sec- S M-La Librtad 70 66 81 ondary students taking the test at the end of the Ucayali 85 cycle scored below a minimum standard in math- Lma-ca 57 55 58 ematics, nuae, social sciences, and natur sci- tOW 83 55 131 nces. In spite of the low levels of academic per- formance 25 percent of the relevant age group is 'The 1991/92 Demograpc and HealtnHrvey ress enrolled in institutions of higher education. Gov- for Peru bndicate a national IMR of 64/1,000, with raes emrnent spending on higher education represents forrions fm 30,0Lma)to 103/1,000 (Inca). about a third of total expenditures on education Source: Mist&Y ofHeakh, INFJ (1984 data), surpassed on the continent only by Venezuela. This indicates a need to re-examine budget priorities, and to explore whether public spending on higher education results primarily in increased producdvity or postoned unemployment Health and Nutition 3.12 Another issue is the perstence of a rda- Health Conditions tively hih rate of iteracy. Between 1961 and 1981 the illiteracy rate deceased by slightly more 3.13 Peru faces serious health problems, in than half, from 40 to 18 percent. However, in 1986 terms of both mortalitY and morbidity. Infant and illiterates still represented 13 percent of the popu- maternal mortality rates are among the highest in lation. Census and household surveys show that il- Latin America. There are wide disparities in health literacy is primarily concentrated in rurwal areas and conditions within the country. The risk of infant affects disproportionately women, the Quechua death in the Inca, Wari or Mariategui regions is speaking population and those living in the geo- twice that in Lima (Table 3.3). At the departmental graphic area called "Trapecio Andino". More than or provincial levels, differences are even more a third of the population living in rural areas was striking. A major share of morbidity results from illiterate of which 70 percent were women. Ciov- causes which would be preventable through vacci- emnment efforts to eradicate illiteracy have been nation or improvements in sanitation. In 1991, for more effective among males and urban dwellers example, Peru faced the most serious outbreak of than among women or rural dwellers. During the cholera in the Americas in this century. Typhoid eighties progress to reduce illiteracy slowed con- fever and hepatitis are both endemic. In some ar- siderably compared to the gains achieved during eas, leishmaniasis, yellow fever and dengue are the 1970s. As a consequence, the number of illiter- important sources of morbidity. Added to already ates increased by 1.5 percent between 1980 and serious morbidity patterns is evidence that some 1986. important diseases are on the rise. Tuberculosis 30 cases have increased 20 percent over the last 10 years and malaria cases have doubled over the PERU: TABLE 35. PERUTV4SMT OF CONTAC!S same petiod. N THE U1IRNAL-CHI) PROGRAM 1989 Status of Services Numberof GrOup Contacts per 3.14 The primary health care network has ex- hIdividual panded over the last tel. yeats. The number of health centers has increased by 60 prcent and the Pgnant Women 1.9 number of health posts has doubled. Curently JAmting Women 0.4 about 1,000 health centers and 3,000 health posts Family planning 1.7 Under One Yea 1.6 exist nationwide (about 1.9/10,000 inhabitants) 14 Yeuars 1.6 potentially an acceptable number depending on the 5-14 Years 15 geographic dispersion of the population and the Vacinations < 4 Years 1.8 personnel and equipment available at eachsa- O among those raivin care fm lishment- Ministry of Healhi 3.15 Table 3.4 shows the coverage of some ac- Source: Ministry of Health tivities under the Ministry of Health's matenal and child health program. The coverae of infants under age one is probably overstated becase par- ents must visit a health facility in order to receive a for all activities. For example, on average, lactating birth certificate. Often the visit occurs when the mothers receiving care have only 0.4 health con- child is a couple of days old and is not followed by tacts per year and pre-school and school-age later visits. About 60 percent for prenatal attention groups show similarly low numbers of contacts. is relatively high. However, coverage of other equally important services is extremely low. For 3.16 The availability of pharmaceutical prod- example, family planning progwams serve only 6 ucts is a critical factor in the provision of high percent of women in the feraile age group, well be- quality health services, both to achieve effective low regional norms. Examining the quality of care treatment and to create the confidence of benefi- for vulnerable groups, Table 3.5 shows that it is ciaries and health workers. Pbarmaceutical supply significantly below the target lvels of the Ministry to the public sector has suffered from: (a) a disor- _anized logistics system; (b) budget constraints; TABLEX3 and (c) the failure to place high priority on drug PERU: COVERAGE OF THE provision. In 1984, about $145 million was spent MATERNAL-CLW PRO.RAM 198 in Peru on medicine from private pharmacies, in- dicating that the commercial sector is an important Total Percent Recewmg source. However, in the face of declining incomes Population Population Minisy of Health and higher prices for imported medicines, many Subgroup ('000) % people are relying more on the public sector, exac- Pregnat women 645 57 erbating the Ministry of Health's supply problems. Lactaing women 630 13 Family Plannng 1 4,950 6 Issues Less than one year 630 86 1.4 years 2,221 2 3.17 While the distribution of primary health care infrastructure is good, the poor distibuton 1. Women of fertle age of professional resources is a major issue. There are three dimensions to the problem. First, al- Somrce: Mhrisfrh of Health though the total number is adequate in some fields, such as doctors, health professionals are ten times 31 T,,3 recent economic crisis has been the marked NURSESERDOCTOR physical detedoration of the buildiW and shortages of equipment As a result the signifi- 1975 1980 1985 1990 cant cons;tcton program for health centers has not had the intended results. As of 1990 only thr- Peru 0.5 0.70 0.66 0.66 quarters of the centers which had been constucted were functioning because of the lack of equipment ain Amedca 2.01' 1.95 200 - a. 1974 3.19 One effect of the recent economic crisis a 1974 seems to be a very low utilization of primary health care services as seen in a small sample of Sour: Minisy of Health and Orosb, Sodal health centers in Lima and Piura (a city in the apending Lan Ameica, World Bank Discussion costal region). In several centers, the average pro- Paper No. 106. ductivity of the professional was 2 consultations/ hour, whereas an acceptable norm would be 41 hour. Other examples of low production are the more available in Lima than in the least developed few emergency patients seen on the evening shift, regions. In the sierra region, physician availability the small number of laboratory analyses done per is only about 1/34,000 people. Second, the compo- day and the low occupancy rate in maternity hospi- sition of skills is not optimal mainly because the tals. In the South LJima UDES, an analysis of ser- ratio of nurses/doctor and nurses/population is too vice production demonstrates a significant de- low. Throughout the country the availability of crease in most activities between 1988 and 1990. nurses is clearly insufficient. PAHO recommends The average number of consultations per hour for a ratio of between two to four nurses per doctor. If all personnel in health centers was 2.44 for doctors the ratio is lower, it implies that doctors, who cost and 2.04 for midwives, relatively low considering more to train and to pay, will have to perform tasks the high population density. The poor utilization of for which nurses are adequately skilled. 'The ratio health services is likely to be due in large part to of nurses to doctors in Peru is below one, substan- the lack of effective supply. Part of the explanation tially lower than the average for Latin America. may be user perceptions of limited value because Third, as already mentioned, the aspect of service of lack of equipment, supplies, etc. in health facili- most imPorant to the poor is primary health cm. ties and poorly trained staff. The resources from the Ministry of Health in this area are 1/16,000 for physicians and 1t20,000 for Nutitlon nurses, extremely low ratios. Health professionals who work for the public sector have been ad- Child Nutri0onal Status versely affected by the decline in real salaries in the civil service. This has caused morale problems 3.20 Chronic child malnutrition is a serious and and work stoppages. A majority of Ministry of widespread problem. A nationwide survey carried Health workers were on stike for four months dur- out in 1984 found that six percent of children suf- ing 1991 in the midst of the cholera epidemic. fered from some degree of acute malnutrition Nevertheless, the total supply of doctors and (wasting) and over 51 percent suffered from some nurses in Peru rose at an annual average rate of degree of chronic malnutrition (stunting). Both nearly 5 percent between 1985-1990, exceeding acute and chronic malnutrition were concentrated the rate of population growth. among children in the sierra regions. Over half of sierra households had malnourished children, com- 3.18 Although the number of primary health pared to 13 perc- r. of Lima households, 16 per- facilities appears adequate, one of the effects ofthe cent of selva haus,holds and 19 percent of other coastal household. While overall, 6 percent of 1. "SocialSpendinginLatinAmerica: TheStoryoftel980st"by children were severely stunted, 11 percent of chil- Marr rosh, Wodd Bank Discuon Paper No. 106. dren in the sierra were severely stunted. Only 1 32 percent of children were moderately or severely TAKE3.7. wasted. Child nutritional status had improved little PEU:sDsEA TRENDS between 1972 and 1984. The 1991/1992 Demo- (C pMe,Mpopuaien) graphic and Health Survey results suggest that little has changed since 1984. This recent survey 1980 1989 again found 50 percent of children under age five sufrn_ g frm some degree of chronic maltiton. Tios 93 124 Acute Respity Iness 470 3,146 3.21 A regional comparison of child nutritional Acute Disihe Dease 444 1,379 status in Peru with Bolivia, Colombia, Ecuador S and Northeast Brazil based on UNICEF data for Suveillan the most recent years available in each country in- dicates that in 1984 Peru had the highest propor- tion of moderately-malnourished children (11 per- period. cent) and a relatively high share of severely mal- nourished (2 percent) based on weight for age cri- 3.24 Data suggest that food security has de- tera. The data also suggest that higher overall food clined for the poorest quintile of households in availability is no guarantee of better nutrition Lima as compared to 1985/86. This is in spite of among children, since Peru's food availability is the fact that the shae which Lima residents spend better than countries with better child nutrition. on food decreased across all expenditure levels be- Other factors which influence child nutrition in- tween June/July 1990 and October 1991. The most clude the lack of adequate household purchasing likely explanation is a decline in the "lative price power, inappropriate feeding beliefs and practices, of food (Table 3.9). For other parts of Peru, poor and child infection. households in the ural sierra continue to spend the highest proportion on food, followed by the poor 3.22 Patterns of growth faltering among Peru- in the urban coast and the urban sierra (Table 3.8). vian children dunng the weaning perod (between 6 and 24 months) and later improvements suggest Micronutres that child growth is jeopardized more by inappro- priate weaning practices than by lack of food. 3.25 A national smuvey in 1986/87 estimated Compared to the U. S. National Center for Health that goiter is endemic in 88 percent of communi- Stafistics reference population, the growth of Peru- ties in the sierra and selva and that the average vian children tends to slow by 6 months of age and prevalence among school children is 34 percent. to resume expected rates by 24 months of age. The problem is most common in areas where diets have no natural source of iodine. Since 1940, Peru 3.23 In light of the close link between malnutri- has had laws governing the production and distri- ton and infection, information on morbidity trends bution of iodized salt. In practice, however, only provides additional insight into the nutrition situa- 60 percent of the population consumes iodized tion. Surveillance data from the Ministry of salt. Reasons for this low coverage include higher Health's Epidemiology Office highlight significant cost, irregular distribution from production points increases in the incidence of acute diarrheal dis- along the coast to endemic zones and the large ease and acute respiratory illnesses. As Table 3.7 number of natural sources of non-iodized salt. Na- illustrates, from 1980 to 1989, the rate for acute tional programs have successfully overcome simi- respiratory illnesses increased six-fold and that of lar obstacles in Brazil and Bolivia by subsidizing acute diarrheal diseases doubled. This suggests the increase in production costs and by involving greater precariousness in living conditions, de- small production facilities which market salt from creased effectiveness of preventive health mea- these natural sources. sures and the increasingly vulnerable nutritional status of the population. It is unclear to what extent 3.26 No comprehensive study has been under- increases also reflect better reporting in the later taken to determine the prevalence and concentra- 33 ka TABLEM3.L TABLE 3.9 PERU: CHANGES IN HOUSEOLD PERU: FOOD CONSUMiON AS FOODSHARE PERCENTAGE OF TOTAL CONSUMPllON BY REGION AND ENDITlE LEVELS FOR Lur J ouSEHOLS FROM 15686 TO 1991 Quintilo 1985/86 Junewuy October Poo0oC Poo" AU 1990 1991 10% 30% 1 53 64 59 Urban 1985/86 65% 62% 49% 2 55 61 55 Coast 1991 69% 67% 55% 3 51 55 52 4 48 51 49 cdan 7% S% 6% 5 38 42 33 Urban 1985/86 64% 65% 48% Average 45 49 43 Sioera 1991 61% 63% 50% Source: Glewwe and Hall, 1991; Cuanto 1992 chae -3% -2% 2% Rual 1985/86 72% 77% 72% Development Program is a nationwide promotion Siera 1991 76% 76% 68% program In addition the Ministry operates the Na- tional Program to Control Goiter and Endemic dcue 3% -2% 4% Cretinism (PRONABCE). The Child Growth and Source: Glwwe, 1987; to92 Development Program aims to promote integrated child health, improve child survival and improve the quality of life. Four of the program's eight ob- tion of iron deficiency anenia. Small scale studies jectives relate to growth monitoring: (a) monitor- among population subgroups indicate that anemia ing growth as a way to target children for nutri- is a public health problem, particularly among tional supplementation; (b) promoting supplemen- pregnant and lactating women and children. With tary feeding for at-risk mothers and children; (c) increased economic hardship, rates of anemia are identifying and rehabilitating malnourished chil- likely to have risen as people reduce consumption dren through community food distribution; and (d) of animal and other iron-rich foods, relatively ex- conducting community outreach to stimulate de- pensive sources of calories. mand for growth monitoring. The other four relate to improved prenatal nutrition, breastfeeding and Nutritink Services approprate weaning; (a) improving birthweight through maternal care, including food, iron and io- 3.27 Programs to address malnutrition include dine supplementation; (b) encouraging joint rooms food assistance, health programs and education in hospitals for mothers and newborns; (c) provid- campaigns. Peru's extensive experience with food ing trining at health services on techniques for ex- asance is covered in the next chapter. However, clusive, long-term breastfeeding; and (d) promot- feeding programs are not the complete answer to ing appropriate weaning. While program objec- improving nutritional status. Malnutrition is not tives are comprehensive, its budget and activities only the result of a lack of food. Parasites, diseases are inadequate to achieve them. In 1991, the oper- and other health problems are often to blame. To ating budget was under $300,000. The low funding be effective, therefore, nutrition programs need to for the program contributes to a high concent,ation be combined with health programs including ma- of activides in Lima. The program also centralizes ternal and child health, immunization, sanitation, supervisory responsibility, making supervision of dewomting, oral rehydration therapy and micronu- health center personnel an expensive undertaking trient supplementation. Education in primary with limited involvement of the subregional level. health and nutrition is also crucial where local practices are inappropriate. Issues 3.28 The Minis of Health's Child Growth and 3.29 Nutrition in Peru is characterized by the 34 participation of a wide range of actors - the central sis for a nutrition surveillance system. The Minis- government, regional govemments, community try of Health and regional governments have been groups, donor agencies, private firms and NGOs. collaborating with the NGO PRISMA to establish Considerable gaps and duplications occur In regional surveillance systems. This work has be- the hnctions of these actors. Within the central gun in Arequipa, Lima and Iquitos. The Govern- government, the Ministry of Health is formally re- ment sought to promote greater interagency coor- sponsible for problem diagnosis. However, t does dination by organizing the SISVAN Network, a not always guide actions by other central gov. loose association of governmental and non-gov- ernment agencies. PRONAA operates on the ba- enmmental agencies active in nutrition. Within tight sis of its own problem identification as does the resource constraints, a nutrition surveillance sys- Ministry of Education (School Feeding: "La tem to monitor small sentinel populations repre- Escuela Defiende La Vida"). No clear mechanism sentative of important target groups would be ap- exists for prioritizing problems or for channelling propriate. Selected local health authorities could government efforts to resolve them. Multilateral periodically monitor nutrition status under the and bilateral donor agencies, non-governmental guidance of regional and Ministry of Health offi- agencies and community groups base their activi- cials. This would complement currently available ties on their own perceptions of Peru's nutrition data dawn largely from program beneficiaries for problems. program monitoring and evaluation purposes. 3.30 The function of establshig norms and 3.33 Peru does not have a nutiton policy. standards largely nglcted. The Ministry of The absence of a framework has led to duplication Health only establishes standards for food quality of functions among state and private agencies, a and growth monitoring protocols. Multilateral and lack of atteaion to achieving major improvements bilateral agencies establish their own standards in in nutritional status and less than optimal resource other important areas. The Govenmment should de- use. Peru needs a national nutrition policy to velop standards in three key areas: (a) unit costs achieve four major aims: (a) to establsh consensus for interventions; (b) food assistance progmming on the priority ranking of problems and target practices; and (c) information collection and im- groups; (b) to identify key functions in nutrition pact evaluation. and establish institutional responsibilities; (c) to set program standards for impact, information re- 3.31 No agency of the central government Is quirements, unit costs and quality, and (d) to responsible for mobilizing resources Instead, strengthen its dialogue with extemal agencies. donors base contnbutions largely on their own di- While a fundamental consensus exists that preg- agnoses, funding constaints, dialogue with gov- nant and lactating women and children under age ernment and non-governmental agencies, and spe- five are the most vulnerable group the nutrition cific proect proposas. Outside the central govem- policy will need to establish Peru's priority rank- ment, comm ty groups, NMOs and regional gov- ing among other important groups. How will ernments mobilize resources based on specific choices be made between the maternal-chiid group proposals. The central government could probably and school children? Will rral populations be mobilize greater resources for nutrition if it took a given preference ove urban ones? Will resources more active role in its dialogue with donors. The be directed proportionally to all regions or will Government should assign this function to the critical regions receive the resources required for Ministry of Health and it should seek to mobilize significant advances before funds are channelled to resources on behalf of both govermental and non- other areas? A substantial proportion of nutrtion governmental agencies on the basis of priorities resources come from external donors and major and implementation capabilities. progams are implemented by NGOs. Thus, it will be important to seek donor and NGO feedback on 3.32 Peru does not have a formal system for the policy as it is being developed. As part of its nutrition swrveillnce on a nal leveL How- strucua adjustment program, Peru prepared a nu- ever, several ongoing initiatives could form thi ba- trition plan in 1991. This plan proposes reforms in 35 food assistance and a stronger role for the Ministry illiteracy. Health statlus is poor is Peru. Needed of Health. Under the plan, donated food use would equipment is lacking and personnel is poorly dis- be rationalized to achieve nutrition objectives, tnbuted. The intensity and quality of services are with priority atteation to poor families with preg- not adequate and the latter may have contnbuted to nant and lactating women and chDdren under a decline in the demand for health care. Peru suf- three. The plan reflects valid objectives and the fers from relatively high rates of child malnutri- Govemeit ow neds to takestop to implement it. tion. The response to malnutrition has excessively relied on food assistance and given insufficient at- Coucluslos tention to complementary health measures, mnicro- nutrient supplementation, and the promotion of 3.34 This chapter has reviewed the status of the better health and nutrition practices, including education, health and nutrition services most im- breast-feeding and child growth and development portant for the poor. The major issues confronting monitoring. The next chapter will carry this analy- these prgrams also have been highlighted In edu- sis fiuther by looking in detail at the use of these cation the main concerns are higb repetition rates, services by the poor and identifying activities for a wide disparities in education antainment and effi- poverty alleviation program. ciency within the country and the persistence of 36 4 Towards a Poverty Alleviation Strategy fttroduction broad-based growth and improved, more equitably distrbuted social services. A discssion of two 4.1 In the long run poverty can be reduced only such progams concludes this chapter. Mechanisms if broad-based growth is achieved. However, the to generate employment are the subject of much poor must have sufficient access to health and interest in Penr Food assistance is a major public education services. Otherwise they may not be program spending substantial resources. educated or healthy enough to take advantage of the opportunities available in an expanding economy. Sodal Services Also, it will take time to dismantle bad policies and respond to new incentives. The benefits of growth Education may not flow immediately to some of the poor, pariculalyinPeruwheremacroeconomicinstabil- 43 EDUCATION AND THE POOR. Poverty ity and economic deterioration have been so severe influences school attendance in two ways. First, and where extreme regional disparities exist in the children of poor families begin attending school at welfare of the population. Vulnerable groups such a later age; second, a larger proportion of children as mothers and young children, the old and the sick of the poorest families never attend school or drop- are not able to participate fully in the economy. For out very early. Data show that attendance rates for these reasons, a strategy to alleviate poverty needs chidren between the ages of 6 and 10 are lower for to incorporate special efforts in social services. The thepoor.(rable4.1)Amongpoorhouseholdsinthe issues relating to basic education, primary health rural sierra, 8 percent of children aged 6-10 are not and nutrition services, which were discussed in the attending school, a high figure in the context of previous chapter, suggest cerain lines of action. In neary universal primay education in other pars of this chapter that information is supplemented with the country.' Two possible explanations for the data on the use of social servicesby the poorin order higherattendance rates for older children from poor to Wdentify specific p ams frpoverty alleviation householdscomparedto those for younger children are that they start school at a later age and that they 4.2 Even with improved social services, in the short-run some groups may remain vulnerable be- 1. Anendace mm fmm te PLSS are higher than Govenment cause they are already living on the edge. For these admat (ppg.aph 3.3). The Govenmnt figures ane deived peoplewelldgnedsociacompensationproams from enrome informadon frwm schools wad esimates of the could complement the two main elements in pouaon fiee dh oemagecategorks.n pthecase oftheSSb the poverty alleviation strategy - promotion of hndef anbd on rpopdlmation 3- TABLE" . PERU:SCHOOLATTENDANCEDY 4.6 EDUCATION PROGRAMS TO ALLE AGE GROUP AND POVERTY LEVEL VIATE POVERTY. The first priority is to increase the internal efficiency of schools in poor areas. The Extremely Poor Poor Non-Poor poor academic performance of primary students ADAa and low completion rates among those in rural and poor uban areas, demonstrate the importance of 6.10 yxeasf improving the capacity to retain students, to move AntrtdsSchool 94.1 95.6 989 them faster through the system by reducing repeti- Does Not Attend School 5.9 4A 1.1 tion, and to increase the knowledge they get through 1114 yars schooling. Improving conditions in rural multi- Atends School 98.8 993 99A grade schools would particularly benefit the poor. Does Not Attend School 1.2 0.7 0.6 This can be done by developing specialized text- Pi"al Sian books and materials and providing teachers with Rtaining geared specifically to the requirements of 6.10 years multigrade schools. Attends School 92.2 92.1 97.2 Does Not Atend School 7.8 7.9 28 4.7 Second, a program to provide textbooks 11.144 ye and teaching materials and to train teachers for Attends School 97.1 98.0 98.6 otherschoolsinpoormarginalurbanandruralareas Does Not Ated School 2.9 2.0 1A can improve the quality of teaching, increase stu- Source: 1991 dent time dedicated to school work and provide Sourc: 1991 PLsS more relevant learning experiences. These contib- ute to reducing repetition and to improving intemal repeat grades. efficiency which will load eventually to higher primary school graduation rates at fewer school 4.4 Attendance rates for female students are years per graduate. somewhat lower than for male students, but by a relatively small amount Thepatternisevidentinall 4.8 Third, pre-school programs that concen- areas except Uma, but the pattern is more pro - nouncedamongtheextremelypoor,withtheexcep- TABLE 4.= tion of the rural sierra where it is present among all PERU: KINDERGARTEN AIF1ENDANCE BY households. POVERTY GROUP 4.5 One factor behind the relativey high rep- Ermly Poor Non-Poor etition rates for children from poorer households is Poor lower kindergarten attendance (Table 4.2). About Peree Atending 22 25 37 86 percent of 5-year olds in non-poor households attend kindergarten, whereas the share for the poor PRONOE 43 34 19 is 55 percent snd for the extremely poor only 45 Go[e K 8 4 percent.Thelowerattendancemayreflectapercep- o 1 1 o tion of low quality services or a lack of knowledge of the benefits of kindergarten because the main Kindat by Age reason given for non-attendance is that the "chil- 2 9 7 10 dren are too small", not financial constaints or a 3 18 18 24 lack of facilities. Children from poor households 4 34 40 60 attend mainly PRONOEI or Government-run 5 45 55 86 schools, while children frm better off households attend private kindergartens in substantial num- Sore: 1991 PLss bers, as well as Government-run schools. 38 trate on prepaing students for primary education TABLE 4.3. have been shown to be useful in other countries in PERU: PERCENTAGE OF CILREN reducing repetition in the early primary grades. RECEIVING ALL REQURD VACCINATIONS Such programs both improve the likelihood of (Sff Reported) student promotion and reduce the risks of ay Poor* Non- 0-2 3-5 6 9-12 dropout and should be stressed more in the poorer poor. areas of Peru. Steps need to be taken to improve the preparation of children for school in the PRONOEI Al Are 75 81 52 78 86 90 and Government-run kindergartens and to promote ijma 84 86 58 88 94 96 greater awareness of the values of kindergarten Urban Coast 75 80 61 68 85 93 Urban Sierra 77 82 53 81 91 89 among the poor. One way to attract poorer students Rural Siem 65 70 37 69 75 78 would be to offer school feeding programs at this level in some localities. 'Ages 0-12 4.9 Fourth, a program to teach non-Spanish Soume: 1991 PLSS speaking women basic functional skldls should be part of poverty alleviation efforts. The incidence of based or PLSS-based rates for younger children. poverty among non-Spanish speakers is vety high. mmunization coverage for children under two in Since illiteracy creates obstacles to using informa- other areas ranges from 50 - 60 percent. These tion and hence to impoving living standards for compareto coverage of nearly 90 percent for older themselves and theirchildren, poor illiterate women children. In general, vaccination rates are higherfor are trapped in a vicious cycle. Basic literacy and children in better off households. numeric skills can help to break this cycle. Pro- grams to reduce illiteracy in this group must con- 4.11 Vaccination coverage usually overstates siderthattheyarewidelydispersedandthushardto access to health services because immunizations reach and that their free time is minimal. Experi- are the focus of special campaigns. Table 4.4 pre- nce from other countries suggests using NGOs. sents data on the share of ill people who seek They have the capacity to reach deprived areas and medical care. As expected, these numbers show a to incorporate literacy programs into ongoing ac- lower coverage than for vaccimtions. There is also tivities, thereby reducing costs. a wider gap between the poor and the non-poor. Overall, half of all ill people seek medical care. Health Among the extremely poor, this drops to about one in three. As for vaccinations, that gap is matched 4.10 HEALTHANDTHEPOOR.Vaccinations and in some areas (rural sierra) exceeded by differ- are important to improve the health of children. ences between regions. Access to health services is Data from the Expanded Programme on Immuniza- more equitably distributed in Lima relative to other tion (EPI) indicate that coverage of infants under 1 with 3 doses of DPT (a common measure of vacci- T .4LE" nation program success) was 71 percent in 1991. PERU: PERCENTAGE OF ILL WHO SEEK The lowest coverage registered under EPI was 59 MEDICALAITENTION percent for the measles vaccine. Yet based on the Eeely Poor Non-Por response of mothers, recent data from the PLSS Poor suggest lower coverage of immunitions among children under age two (Table 4.3). In the wral AD Areas 34 44 56 sierra, only 37 percent of children under two were Lima 44 53 59 Urba Coast 49 54 63 reported to be fully immunized. While this may be Urban Siea 31 40 55 partially explained by the inclusion of infants too s Rau &erra 24 27 46 young to have been fully imunized it appears to signal a breakdown in services since rates among Sowce 1991 PLSS older children are much higher than either the EPI- 39 areas. There is a particularly large gap between the which have public sewerage facilities account for poor and the non-poor in the sierra. fewer than 40 percent of the cases. 4.12 Where are the poor likely to go for care 4.15 Health Propms for Poverty Alevia. when they are ill and whom are they likely to tDon. The first priority is to provide mothers and consult? In general, the poor are more likely to use young children with adequate primary health health centers, health posts, and pharmacies, than care. This would include: (a) pre-natal anti-tetanus the non-poor. Nevertheless, the highest proportion immunizations,andironsupplementation;(b)sani- of the poor (30 percent) use hospitals. On the other tary home delivery and trained personnel for high hand, clinics - most of which are private - ar. risk deliveries; (c) child immunization and growth overwhelmingly used by wealthier households. In monitoring; (d) family planning information and Lima, while the extremely poor are more likely to supplies; (e) health education; and (f) treatment of visit a health center, the poor make greater use of common infectious diseases and first aid. hospitals. In the urban sierra, the poor use hospitals to a greater extent and there is little reliance on 4.16 Thegreatestbarriersthehealthsystemfaces health centers, particularly by the extremely poor. in providing care are lack of supplies and inad- In the rural sierra, the extremely poor make greater equate human resources, particularly in areas of use of hospitals and less use of health centers and extreme poverty. It is important to improve the posts than the rest of the population. The poor are supply of basic equipment, mateials and medi- more likely than others to consult paramedics, clues necessary for carrying out these activities. pharmacists and traditional healers. But across all These would include cold chain and related equip- expenditure levels the main source of medical ment for immunizations, iron tablets, ORS packets consultations are doctors, obstetricians, and and basic drugs, family planning supplies, educa- nurses.In Lima and the coastal urban regions, they tional materials, growth monitoring equipmern, di- account for over 80 percent of consultations by the agnostic equipment and materials for first aid and poor. In the rural sierra the shares are 66 percent for delivery procedures. Also critical is the hmprove- the extremely poor and 60 percent for the poor. meat of human resources in primary health care, through technical and management training and 4.13 Table 4.5 provides figures on the share of improved working conditions or other incentives those ill or injured who purchase drugs. The data for staff in poor areas. The Government also needs show that the extremely poor household is less to shift human resources into primary care from likely to purchase drugs than others. However, in other areas. both Lima and the coastal urban regions there is oniy a minor difference between the extremely 4.17 Since deteriorated infrstrcture is likely poor and the rest of the population. In the sierra the to pose another significant barrier to primary health fraction of extremely poor households that pur- care, these facilities should be repaired. As the chase drugs faUs from the 80 percent registered in distribution of infrastructure is generally adequate, Lima and the coastal urban area to less than 60 the Government need not construct new facilities. percent. There is only a small regional variation However, if poor living conditions make it difficult in the fraction of non-poor householdb purchasng to attract staff, a program to upgrade staff hous- dgrg. ing for primary health care facilities might be helpful. 4.14 The lack of access to a public sewerage system is clearly related to problems of diarrhea 4.18 Cholera prevention and treatment is a among children. While only 17 percent of house- second priority following maternal and child care. holds lack sewerage facilities, they account for 35 Cholera is a serious health problem. The fact that it percent of child diarrhea cases. Some improvement affects primarily the poor lends it added urgency as is seen with use of latrines; 16 percent of house- a poverty issue. In the short run, the Government holds rely on latrines and they account for newly 20 can strengthen and expand the educational cam- percent of the cases. The 63 percent of households palg launched following the first outbrealk It can 40 TABLE 4.. PERU: DRUG PURCHASES BY POVERYf LEVEL Location All Areas Lhna Urban Coast Extremely Poor All Extremely Poor All Extremely Poor All Poor Poor Poor % of lIU/njuted Wbo Purchased 66 74 79 82 84 84 79 81 83 Drugs Location Urban Sierra Rural Sier Etremely Poor All Extemely Poor All Poor Poor % of IlMlnjured Who Purchased 58 67 76 55 59 68 Drugs Source: 1991 PLSS aLso ensure that all health facilities have adequ- infantsthroughfourtosixmonthsofageandensure ate supplies of medicine, rehydration solution and that weaning foods are adequate for growth. Pro- materials to treat acte cases. In the medium term, grams which prevent or treat infections in the wean- programs to improve water quality and basic sani- ing period (diarrhea, acute respiratory ilness, vac- tation conditions through water system rehabili- cine-preventable diseases) will also contribute sub- tation and latrine Installation are also important stantially to improving child nutrition. The children in rural and margial urban areas. who are the most important to reach are those from poor households in the sierra. 4.19 The third priority is to strengthen hospital emergency services In poor areas To do this, a 4.21 The programs which can promote appro- program should include supply of basic equipment, priate breastfeeding and weaning are maternal and suppiies and medicines, introduction of manage- child health care and nutrition information, educa- ment improvements, rehabilitation of infra- tion and communications programs. A compre. structure,vehiclesandcommunicationsequipment, hensive program begins at pregnancy to ensure and taining and improved working conditions for adequate maternal nutrition and to introduce ex- staff. pectant mothers to the importance of breastfeeding, and continues through regular infant growth moni- Nutritfon toring/nutrition education contacts to promote ap- propriate weaning, immunization, and prevention 4.20 NUITION PROGRAMS FOR POV- and treatment of infection, particularly oral ERTY ALLEVIATION. The most critical period rehydration for diarrhea. As an adjunct, such a for nutrition in Peru is from the age of about 6 to 18 program should include close monitoring and months, when infants are weaned from breastmilk supplementation to rehabilitate malnoed and provided with other foods. This is when the children and more intensive nutrition training for sharpest declines in growth occur and lead to short mothers and caretakers. A nutrition information, stture which is not corrected later in the child's education and communications (IEC3 program life. Thus the highest priority nutrition programs ctnuseappropriatemediatodisseminatemessages arethosewhichpromoteexclusivebreastfeedingof and improve pracfices in breastfeeding, weaning 41 and the prevention and treatment of childhood among other groups and if the project improves infections. infrastructure or facilities used by the poor. About two-thirds of unemployed-leaded households are 4.22 A second prionity is the protection of vul- poor and about 30 percent of these households are nerable groups with inadequate food intake (mal- extremely poor. However, the unemployed-headed nourished children, lactating and pregnant women, households account for a very small proportion of the sickandinstitutionalized,pre-schoolers)through the poor (3.3 percent) and the extremely poor (4 supplementation. This is discussed in the context of ereent). Thus employment programs cannot be the food assistance later in this chapter. main tool to address poverty. In order to better reach the poor, an employment program should focus on 4.23 A third group of high priority nutrition the aeas where the incidence of poverty is greatest interventions addresses deftciencies of micronutri- among the unemployed (area outside of Lima) and ents, particularly iron, iodine and vitamin A. Such wherethe unemployed account for more of the poor programs are impoant within apoverty alleviation (the urban coast and urban sierra). Poor farmers also programbecausethepoorarelesslikelytoconsume would benefit from other employment opportuni- these micronutrients because of the expense (iron, ties. Two issues related to cost-effectiveness of vitamin A) and because they live in the areas which these programs are discussed below - wage rates are most deficient (iodine). The Goverment's goi- and administrative mechanisms. ter prevention and treatment program (PRONABCE) needs to be supported and to add 4.25 WAGE RATES. When a poverty reduc- measures to ensure the iodination of salt from small tion strategy includes a temporary employment producers and temporary iodine supplementation program, the persons employed should be poor. in endemic iodine deficient areas until iodized salt This can most easily be accomplished if the wage is use becomes more widespreadL Vitamin A defi- set sufficiently lowthatpersonswith higherpaying ciency can be addressed parialy through the IEC (andhigherproductivity)altemativesarenottempted program by promoting consumption of vitamin-A to leave them in order to gain temporary employ- rich vegetables and fruits, and adequate oil con- ment with the emergency program. A low rate sumption. The maternal and child health program ensures that an automatic self-selection will occur. can also prevent vitamin A deficiency in children It also means that resources wil stretch further than by including semi-annual vitamin A distribution in if the wages were higher. An analysis of the impact conjunction with immunization or when children of the Bolivian Emergency Social Fund (ESF) are treated for illnesses. Iron deficiency can be showed that the magnitude of benefits which ac- addressedbyincludingironsupplementationamong crmed to the workers who participated vaneo de- the activities of the maternal and child health care pending on the pte-ESF employment status. The pgam (particularly for pregnant women) and average ESF worker experienced a 35 percent in- by fortifying staple foods with iron where cost- creaseinweeklyeamingsoverandabovewbatthey effective. could have expected without the ESF. However, those workers who were either unemployed or Soda! Compensation Prorm who, prior to the ESF, had salary levels well be- low average, experienced increases five times that 4.24 PUBLIC EMPLOYMENT SCHEMES. high.2 Employment programs can reduce povery by pro- viding employment (and thus income) to those in 4.26 Considerable administrative advantage need and can generate additional benefits through accompanies the use of an appropriate wage rate. the rehabilitation and reation of infiasucture. No wmeza test needs to be applied to ensure that These programs canbecost-effectivebecausepoor beneficiaies are poor since only the poor will be r-oplearewillingtoworkforarelativelylowwage. The impact of an employment program on poverty 2NmigeneandPrdam,HowDidWorkrsBeaefi wil be greater if unemployed-headed households hm Bolvia'sSoLialFund? Dhe WorldBankEconomicReew, are found to a greater extent amuag the poor than May 1991, volume 5, No. 2, pp 367-393. 42 TABLE 46 PEMU: UNEMPLYEl BY POVERTY GROUPS (%) All Etemely Poor Others 2.S 4.0 2.1 2.5 3.2 25 3.0 7.5 2.2 Urban coast 5.5 1.2 Urban Siem 2.3 2.7 21 Rural Siera m2.1 AM Poor Non-Poor 2.S 3.3 1.7 AU _ 2.S 4.0 ~~~~~~~~~~~~1.6 Limal 3.0 3.8 2.3 Ubanst coa. 1.9 2.6 1A4 Urban Sierra 2.3 2.6 2.0 Rural Sienra /. Source: 1991 PISS willing to work at the wage rate offered. For the tract monitoring must leave some flexibility for reasons outinedabove the maximum average wage skilled and supavisory personnel to earn more than rate recommended for any temporary ewployment the minimum, project criteria should favor contrac- program is the legal minimum rate. What propor- tors whose wage bills reflect general observance of tion of the labor force would offer themselves for the minimum. The project criteria should also en- work if the legal minimum wage were offered? One sure that projects be relatively labor-intensive. The source asse.ts that nearly one-third of the labor Bolivian Emergency Social Fund (ESF) included a force earned the legal m.nimum in 1990.3 Yet requirement that no less than 60 percent of any official sources claim that only about 10 percent of project's budget be spent on labor. the labor force earn the minimum wage. Either figure suggests that an emergency employment 4.27 ADMINISTRATION.Adesignfeaturethat programthatofferedthelegalminimumwagewould would promote cos.-effectiveness would be the not lack prospective workers. In order to improve locally demand-driven selection and administra- targeting, there isan argumentforofferingless than tion of projects. Projects should be prepared by the minimum wage. However, the income transfer residents and representatives of the community. mightnotbesufficienttoalleviatepovertyfor many Thisensuresthatprojects rankedlocally asthe most households and using less than minimum wage needed are done first and that the overall program would make it more difficult to use private contrac- has strong support. It also avoids administrative tors. While the process of bid solicitation and con- over-centralization and the costs of a large bureau- cracy. In order to increase the impact of an employ- 3. lusftwo Cuanwo, Ajuste y Economia Familiu 98S-990. ment program on the poorest groups, some consid- Lima,1991, p. 30. eration might be given to geographical targeting. 43 Althougli all regions could be eligible to receive 431 INSTITUIONS. A wide variety of gov- financing, higher-income locations (Lima, for ex- emmentalandnon-governmentalorganizationsplay ample) might be required to offer a greater propor- important roles in food assistance. Within the Gov- tion of local counterpart contributions. In order to emient, the National Food Assistance Office encourage efficiency in resource use, the participa- (O.NAA) was responsible for coordinating the re- tion of private contractors also should be promoted. ception, transport and distribution of food assis- tance commodities nationwide. In practice, ONAA Food Assisance performed these functions foronly aportion offood assistance programs. The Government has recently CurrentStatus: Magtude,Agendes,Pomg s created a new agency, PRONAA (the National Food Assistance Program) which combines ONAA 4.28 This section examines how well current and PAD, another agency formerly responsible for food assistance programs meet the dual objectives some food assistance to urban women's groups of protecting food security for the poor and protect- (comedores). Within the Ministry of Health, the ing the nutritional status of vulnerable groups. It National Feeding and Nutrition Institute (INAN) begins with a review of food assistance - its coordinates the implementation of several direct magnitude, institutions and existing programs. It food assistance projects. then discusses major issues in food assistance and provides recommendations for both broad rt loo is 4.32 Non-Governmental Organizations possess and specific programs. considerable capability in food assistance. CARlTAS operates a nationwide network which 4.29 MAGNITUDE. Food assistance in Peru is distributes a greater volume of food assistance than of growing importance in relation to worldwide ONAA.CARE,PRISMAandOFASAimportfood food assistance and Peru's social sector resources. sommodities, design and supervise food programs ne severe needs facing the population make it and mobilize donor support for food assistance imperative that these resources be used effectively. programs. CARE also monetizes imported food While the volume of worldwide food assistance commodities on the commercial market in Peru to increased by about 40 percent, food assistance to generate local currency for food assistance progrm Peru increased by about 240 percent (1980 - 1987). In 1991, food assistance programs provided over 4.33 EXISTING PROGRAMS. Eight major 226,000 metric tons of food to at least nine million food assistance programs operate in Peru. Three of beneficiaries. In the same year, while the central these programs target food assistance to women government's budgets for the social sector minis- and children; one to school children; two to the tieswere $186 million forHealth and $245 million urban poor; and two to the rural poor. Table 4.7 for Education, donor food assistance resources to- summarizes coverage and cost information. taled at least $150 mnillion. 4.34 The three programs which target food as- 4.30 The transfer value of food assistance is also sistance to pregnant and lactating women and pre- important relative to the overall expenditures of the school children are PAT-PAMI, PANFAR and poor in Lima. According to results from the 1991 Vaso de Leche. The PAT-PAMI project is funded PLSS, in Lima food assistance and other transfers by the World Food Programme and implemented from non-profit organizations represent one fourth of by ONAA, INAN and the Ministry of Education. It total expenditures in extremely poor households and operatesit Lima-Callao,Ancash,Cajamarca,Cuzco almost ten percent of expenditures for poor house- and Puno. It aims to protect the nutritional status of holds. Without this assistance, the extremely poor in pregnant and lactating women and pre-school chil- Lima would consume at the same expenditure levels dren. The PANFAR program is funded by AID and as the extremely poor in the rural sierra. For the poor implemented by sub-regional health authorities outside Lima, this accounts for a mninor percentage (UDES) under the supervision of INAN. ONAA is of household expenditures because the levels of responsible for food warehousing and the NGO food assistance outside Lima are relatively low. PRISMA is responsible for transporting food to the 44 TAU 4.7. ffERU: MJOR FOOD ASSISTA4CE PROGRAM 1991 Vssode Leich Escuela PAT- (IUa. Defende Progrm Name PAMI PANFAR Calbs) la Vida ARCA DAIREZOD Cawdor PRODIA Poam TYpOCH MC MCii Sdcool Rual Poor Rwr Poor lgaIm Poor Urban Poor Food Soure WFP AID Treas Treasury AID WFP WPP AID MetricTons 17,300 21,000 7,100 .. 1,20 6,600 22,20 31,200 Food Value (in USS milibns) $6.7 8 0 S10.8 . $0.5 $33 S4.0 S12.1 TotalProgrm Value(inUS$millons) .. $23.7 S113 $13.7 S1A - - StS3 Beneficaries 209,000 596,000 1,200,000 3,500,000 45,000 71.000 440000 635,000 Food CohBcnflcy $32 $13 $9 .. $11 S47 $9 S19 Total Pogram Cost/Beneficiary .. $40 S9 $4 S30 .. $24 FoodVBeneficbay (kg) 83 35 6 .. 28 94 50 49 Food Cost/Kilo $039 $038 $1.52 .. $0.40 $0.50 $0.18 $0.39 Pogram CosVi/togrm Food .. $1.13 $1.59 .. $1.09 .. - $0.49 Ohr Costs as % Food Value .. 197% ,% .. 170% . 27 SouTce: Compibtion from Maguina, Yamada, MOE, AID, WFP, CARE, PRISMA, CARlTAS repom UDES level. This program operates in 22 of the PogamopeatesiAncashApunmacAyacucho. county's 25 dpartments. It also seeks to improve Cajamarca, Cuzco, Huancavelica, Junin and Puno. the nutritional status of pregnant and lactating The DAIREZOD Program operates in Ancash, women and pre-school children through supple- Apudmnac.Areqipa,Ayacuho,Cajamarca,Cuzco, metary feeding. Although Table 4.7 includes in- Huancavelica, Ica, La Libertad, Moquegua, Piuras formation only for the Vaso de Leche Prgram in PunoandTacna lhe beneficiaries of these projects LiTma and c,IIlao, the Vaso de Leche program is are relatively few and food assistance is only one of funded by th,. Government of Peru and operates several components. nationwide, wherever provincial governments are willing to assume responsibility for its manage- 4.38 PROGRAM COVERAGE AND INCI- ment. It provides milk to children under six and to DENCE. The October 1991 PLSS information pro- pregnant and lactating women on a daily basis. It vides insights into the way some food assistance also supplements school children up to age 13 programs actually work. lhe survey covers the during school vacations. Its objective is to stop Vaso de Leche program, food assistance through malnutrition among its target groups. comedores and other simila outlets, and municipal progms. First, it suggests that food assistance 4.35 The major school feeding program is the reaches a significant proportion of the extremely Escuela Defende La Vida program created within poor or the critically poor only in Lima. There 74 the Ministry of Education in 1990 under the Social percent of the extremely poor receive some food Emergency Program This program seeks to reduce assistance4. Among the poor, 37 percent benefit, school desertion and absenteeism and to improve while among the non-poor, only 6.5 percent benefit. academic performance. From August 1990 through In all other areas, fewer than four percent of the July 1991, the program provided sporadic food extremely poor or critically poor benefit from food assistance to 3.5 miUion school children. Fifty assistance. percent of resources were spent in Lima, which accounts for 21 percent of school enrollments. 4.39 Second, in Lima most food assistance ap- pears to be relatively well targeted to the poor, the 4.36 The two major programs which provide non-poorgenerally havelowparticipationrates and direct food to the urban poor are the WFP-sup- receivearelatively small share ofprogram benefits. ported comedor program and the AID-supported However, in other areas, 44 percent of the benefi- PRODIA program. Combined they targeted over 1 ciaries of all food programs combined are from the million urban beneficiaries in 1991. Both programs non-poor. employ the same vehicle-the comedor, commu- nity kitchens which self-selected groups of women 4.40 Third, actual coverage appears to be sig- in poor urban neighborhoods establish to provide nificantly lower than programming levels. For ex- low-cost lunches to their members or the general ample, VasodeLeche program documents indicate public. The WFP comedor program operates in thatittargetedl.2millionbeneficiariesinLimaand Lima and Callao through Caritas. Imported food Callao alone. At the same unit costs, the $42.5 commoditiesaremonetizedtoprovidefundsforthe million national budget was sufficient to reach purchase of local foods which are distributed to about 4.5 million. Yet, according to the survey comedores.ThePRODIAprogramoperatesinLima- results, only about 700,000 beneficiaries were re- Callao, Cajamarca, Chimbote, Piura, Puno and ceiving milk in October 1991, and not all of them Trujillo. Its nutritional objective is to provide from the Vaso de Leche program. Of these, 88 comedoruserswith40percentof theirdailycalorie percent were in Lima. The actual coverage of all and 50 percent of their daily protein requirements. food assistance through women's groups (club de 4.37 The two programs which target food assis- tancetotheruralpooraretheAID-supportedARCA 4. This assmes no overlap of beneficiaries among programs. It is possible that some people patticipate in several programs. in and the WFP-supported DAIREZOD program. which case the oveall peentage who participate would be ARCA, or the Food-Assisted Rural Agroforestry lower. 46 madres, cocinapopular, comedorpopularandoga the government may later be expected to meet. comun) was about 500,000, or approximately half the number that the two urban programs have as 4.44 Food assistance does not reach important their combined target groups. groups among the poor-the rnual poor or the chroni- cally ill such as tuberculosis sufferers. Even among 4.41 Fourth, the municipality's role in provid- groups reached, the lack of complementary health ing food assistance is surpisingly large. In Lima, care and nutrition education measures means that nearly 17 percent of the extremely poor and nearly impact on nutritional stats is likely to be negligible. 8 percent of the poor receive food assistance from the municipality. In both cases, these percentages 4.45 The lack of establishedstandards andprac- are higher than for any other source of food assis- tices for program implementation poses several tance except for Vaso deLeche. Municipalities are problems. First, different agencies fulfill the same relatively less effectivethan othersourcesatdirect- functions using different approaches (e.g., ing food assistance exclusively to the poor. While PRONAA and Caritas both handle food logistics). only 10 percent of all food assistance beneficiaries Second,programsprovidefoodcommoditieswhich in all areas are among the non-poor, nearly 25 are not cost-effective. Given pronounced variations percent of those receiving food assistnce from in the costs of nutrients, Peru's food progmming municipalities are not poor. is not oriented to maximize the nutrient value of each dollar spent. Third, programs with the same 4.42 Finally, programs are not necessarily ef- taget groups and objectives vary in the levels and fective at reaching their intended target groups. An duration of the assistance they provide. Fourth, unit examination of Vaso de Leche beneficiaries sug- costs of programs vary substantially, as shown gests that the progmm is less successfil at reaching earlier in Table 4.7. Finally, no mechanism ensures its intended target groups than at reaching others. that all food assistance programs are monitored and While it aims to reach children under six and evaluated systematically. women, the largest proportion of its beneficiaries are school aged children. Fifty percent of beneficia- Major Recommendations ries are between the ages of6 and 14, while only one in four is under age 6. Nearly 20 percent of benefi- 4.46 ESTABLISH THE POLICY FRAME- ciaries are not poor. WORK.TheGovernmentshouldfocusitsattention on areas which individual agencies cannot under- Major Issues in Food Assistace take-setting priorities, identifying viable strate- gies and evaluating approaches and impact. The 4.43 The major issues in food assistance are the Government should spearhead a collaborative ef- lack of an overall policy framework, the failure to fort with donors and non-governmental agencies to reach important target groups among the poor, and devise a strategic plan for food assistance. This the lack of established standards and practices for plan would spell out the objectives, target groups, program implementation. Peru does not have an institutional arrangements and total resource re- overall policy framework or strategic plan which quirements. The plan would also set standards for would set forth the objectives of food assistance, levels and duration of assistance, entry and exit defme institutional arrangements, assign priorities criteria, unit costs and implementation standards. to target groups and identify appropriate strategies. This plan would ensure that the food assistance In its absence, practice is largely determined by the strategies of all agencies contribute to the same individual judgements and actions of particular national objectives (see paragraph 3.33). agencies. This leads to the use of substantial devel- opment assistance and Treasury resources without 4.47 DEFINE TARGET GROUPS. Special ef- central guidance, clear objectives, or measurable forts are requied to reach high priority target groups impact. This is inappropriate because decision mak- not well served by food assistance at present. The ers lack incentives to be efficient, and because even failure of food assistance to reach the rural poor to non-governmental progams create demands which date suggests that other mechanisms should be 47 explored. Food coupons have been successful in * timely distribution; other countries. Experience shows that success * efficient delivery and logistics systems; and with coupons depends on several key prerequisites: * strong participation by beneficiaries. (a) infrastructure to identify beneficiaries and dis- tribute coupons; (b) food marketing and banking 4.50 In Peru, the areas where standards are most networks to accept them; and (c) adequate security necessary are: (a) the institutional arrangements for measures to protect against fraud. Under such a food logistics; (b)the selection of commodities; (c) system, geographic targeting can be used to reach unit costs; (d) levels and duration of assistance; and poor areas. The Government could encourage the (e) monitoring and evaluation. Logistics are crucial testing of this or other mechanisms for reaching the for effective food assistance programming, and rural poor by providing funding to agencies to depend on budgeting adequate resources and em- experiment with new approaches. ploying efficient operating mechanisms. Food lo. gtiscs in Peru cost between 7 and 22 percent of food 4.48 For the urban poor in general, who are less value, or between $18 and $55 per metric ton of needy than others on the basis of nutritional risk or food. In the past, ONAA suffered from a lack of food security problems, the Government should establishedperformanceandcoststandards,aweak encourage agencies to explore other potentialy information system and dispersion of efforts out- more cost-effective forms of assistance. For ex- side its central role of managing food logistics. The ample, ways could be found to facilitate the pur- government's decision to maintain a state agency chase of food and equipment by comedor groups. such as PRONAA to manage food assistance logis- Comedoresconstituteanimportantnetworkamong tics should be based on a determination that the urban poor and are organized and skilled at PRONAAis more efficient and less expensive than mobilizing support Their abity to respond to private sector alternatives. It should have to com- waves of economic crises has been central to sus- pete with the private sector. Its funding should taming the urban poor in social emergencies. Any come largely via service contracts based on the attempt to restructa urban food assistance should volume of food and the mix of ports and beneficiary bring comedor leaders into the process of identify- destinations.Acarefulstudyoflogisticscostswould ing and designing alternatives. enable the Government to plan adequate resources to cover them. 4.49 ESTABLISH IMPLEMENTATION STANDARDS. The implementation of food assis- 4.51 Commodity selection should use the least tance should be standardized to a greater extent. expensive sourcesof nutrients acceptable to benefi- This would complement the introduction of a clear ciaries. Milk is often used asa source of protein (e.g. policy framework. International experience points Vaso deLeche). Yet with milk at $1,300/metric ton to key factors which can improve the implementa- (1991 WFP price for dried skim milk), it would be tion of food assistance. These include: possible to obtain fourtimes as much protein forthe same price with wheat or soy-fortified bulgur, or * targeting to high risk groups; twice as much with lentils or rolled oats. While * the careful selection of rations; $1.00will purchase 3,00caloriesofwheatorcor, * anticipating and planning for dilution and the same dollar spent on rice purchases less than substitution effects; half this amount. Efforts to optimize ration mixes * strong nutrition education; should also consider additional factors such as the * growthmonitoring/nutritionalstatusmoni- bulk and digestibility of different commodities. toring; Staple foods used in assistance programs should be * strong links with other primary health care fortified with iron. services; e anticipating and planning for opportunity 4.52 A set of unit cost guidelines should be costs of participation; developed for food assistance to determine how * clear and applicable entry and exit criteria; much it should cost to reach a specific target group * consideration of seasonal food consump- in a given location with a given level of assistance. tion patterns; When transportation expenses push the cost of 48 imported food above its local cost and when local 4.56 The Vaso de Leche program needs to in- suppliesareadequate,importedcommoditiesshould crease its ration level and strengthen the quality of be sold to purchase local food. management and controls in order to reach a higher proportion of its target group and have a significant 4.53 Once food assistance objectives and target impact on nutrition. This can be done through more groups become more explicit, it should be possible intensive management training and nutrition edu- for agencies to develop standards for levels and cation to local program managers. It should also duation of assistance. Beneficiary rations should seek ways to provide sources of nutrients which be based on an understanding ofthe nutrient gaps of cost less than milk. participants. Programs with the same objectives and target groups should provide similar levels of 4.57 TheLaEscuelaDefiendeLa Vida Program assistance. For example, to improve the nutritional should target children in grades 1 - 4 and place first status of malnourished pre-school children, chil- priority on rural sierra provinces where the inci- dren who are at the same nutritional risk shod be pro- dence of poverty is high. Because it was started as vided with similar levels of supplementary food for an emergency program, it has relied heavily on the period necessary to reverse this risk. The duration resources already within the education sector. Fu- of assistance will depend on each child's progress. ture budgets should incorporate greater resources for program administration so that school feeding 4.54 The Government should assume the pri- does not divert resources away from educating mary responsibility for monitoring the perfor- children. Future implementation should also seek mance and evaluating the Impact of food assis- to overcome some of the program's early weak- tanceprograms.TheMinistryofHealthcouldevalu- nesses, including an excessive concentration in ate different project strategies on a sample basis to Lima and a lack of continuity in feeding. test their cost-effectiveness. This would strengthen the Government's dialogue with donors and enable Conclusion it to allocate resources to the most cost-effective strategies. The Ministry could also conduct impact 4.58 This chapter has outlined some of the com- evaluations on different programs to determine if ponents of a poverty alleviation strategy for Peru. the strategies are effective at achieving the desired The first plank of the program is the promotion of objectives in nutrition. broad-basedgrowth through implementation of the stabilization and adjustment program. The second ogram Specific Issues and Recommendations plank comprises social service programs focusing on activities most critical to the poor and on the 4.55 MCH programs could be improved by rural sierra, where the incidence of extreme poverty introducing mechanisms for better targeting, stron- is highest. These programs include improvements ger linkage to other services and better impact in the quality of primary and pre-primary educa- evaluation. Food assistance to the MCH population tion, promotion of higher attendance at the kinder- should be expanded. In rural areas, the use of food garten level by children from poor households and coupons should be explored to protect vulnerable literacyprogramsfornon-Spanishspeakingwomen mothers and children. The PANFAR program is in rural areas. In health, the emphasis should be on appropriate forareaswith fairly good health service primary health care for mothers and children. Spe- coverage, good outreach to identify beneficiaries cial efforts are needed to increase vaccination cov- and adequate infrastructure to allow warehousing erage, family planning services and the supply of of food commodities at health centers. An advan- basic drugs in the sierra region. Nutrition interven- tage of this approach is that it strengthens contact tions need to be more closely linked to health between the health center and the maternal and improvementsandanational nutritionpolicyshould child population. This initial contact may be used to be defined and implemented. Recommendations provide other important services such as pre-natal were made on the design of two social compensa- care,immunizations,treatmentofdiarrheaandacute tion programs - public employment and food assis- respiratory illnesses and nutrition and health pro- tance.The next step after defining a poverty allevia- motion activities. tion strategy is to execute it. The following chapter 49 disces some of the issues the Government is pwvt in Peu and how for the Government has likely to fce in implmentig pgms to reduce advancedinid ftygapovertyaUeviaonsutegy. . 50 5 Implementing a Poverty Alleviaton Strategy ntroduction program to lessen the severty of poverty might focus on bringing the extremely poor up to some 5.1 Earlier sections have set forth key issues more acceptable level of welfare. Extreme povery and recommendations in the social sectors as they is prevalent in Pem and the extremely poor are the relate to poverty alleviation. This section exploes least likely to be lifted out of poverty in the short- two important issues in the implementation of a run by opporatities arising from adjustmet. 11i poverty alleviation strategy. First, we examine suggests that In Per poverty alleviation hter. what available infoTmation reveals about how to ventions should be rgeted prmarly to the ex- target measures to the pooresl. Second, we con- tremely poor In order to bring them up to a sider three facts in the instiutional arrangements more acceptable levd of welfre for povety alleviation: (a) the role of a social fund; (b) the regional compensation fund; and (c) the 5.3 While targeting m anisms are often dis- role for NGOs. Tie constaint posed by the lack of cussed in terms of transfers to the poor to increase securty in some pats of the country is also briefly expenditure levels, another approach is to target a discussed The chapter concludes with an exami- safety net of services to the poor to protect them nation of the Government's poverty alleviation from the most deleterious effects of low expendi- strategy. ture levels. This approach would seek reductions in infant and child motality, malnutrition and in- Targetng fection; and increases in literacy and school atten- dance to inree the welfare of the poor indepen- 5.2 The best targeting achieves the greatest dent of expenditure levels. impact at the lowest cost. Targeting mechanisms depend on objectives, the interplay between effi- 5.4 Targeting seeks to distribute transfers or ciency concerns and political factors, and the some other benefits only to those identified as the strength of institutional capacity. Under the broad beneficiary group in the interest of efficiency. The heading of "poverty alleviation" objectives, a administrative mechanism must not cost so much muber of options exis, each with implications for to operate that it absorbs the savngs from exclud- targeting A program to reduce the national aggre- ing the non-needy beneficiaries. If targeting costs gate poverty gap might focus on the regions with more than it saves, universal distribution is a bette the highest incidence of extreme poverty. A sec- option. Shor-term efficiency gains fiom tugeting ond program might aim to reduce the number must also be weighed against longer-term or percentage of people in povery by concentrat- sustinability. If targeting is so effective that only ing on those just below the poverty line. A third the poor have a vested interest in a prowam,then it 51 is unlikely to sustain the public support necesary latrines and the absence of household lighting. for it to survive political processes. This suggests Seventy-one percent of those who use kerosene are that broadening the beneficiary group somewhat to poor (51 percent are extremely poor). Sixty-eight include those with a stronger political voice may percent of households who use latrines are poor be desirable. Somewhat "inefficient" targeting of (46 percent are extremely poor). All households benefits may be the cost of ensuring long term without a source of light are poor; but they repre- sustainability. sent only one percent of the poor. Within regions (Lima, urban coast, urban sierra, rural sierra), few 5.5 Targeting uses indicators closely associ- characteristics serve as useful targeting indscators. ated with need, direct testing to assess need, or The successful targeting of food assistance pro- program design which makes the opportunity costs grams in Lima suggests that a combination of self- of participation so high as to exclude those with targeting and geographic targeting can be used ef- better alternatives (self-targeting). Indicator target- fectively. ing and direct testing both depend on selecting in- dicators which potential beneficiaries cannot easily Insttutional Arrangements manipulate. Self-targeting is often achieved by re- quiring beneficiaries to work to receive benefits or 5.9 THE ROLE OF A SOCIAL INVEST- by providing public goods of lower quality which MENT FUND. To determine the role of a social the non-poor would prefer to obtain privately at a investment fund in carrying out a poverty allevia- higher quality. tion strategy, two questions must be addressed. one, is a social fund appropriate given country 5.6 In Peru, geography is the indicator with conditions; and two, what are the main prerequi- the greatest value as a targeting mechanism. sites for its successful operation?' A social invest- Even with no additional information, a household ment fund is a mechanism now being experi- in the rural sier.; has a 68 percent likelihood of mented with in many countries. It is a financial in- being poor, and a 47 percent likelihood of being termediary with a streamlined bureaucratic struc- extremely poor. By targeting benefits to rural si- ture which mobilizes and channels resources to a erra households, nearly one in every two extremely wide range of implementing groups who carry out poor households can be reached. small projects proposed by communities. The projects range from labor-intensive construction or 5.7 Another indicator which is strongly asso- rehabi'itation works which generate employment ciated with poverty is language. Throughout the for the poor to activities which improve social ser- country, 70 percent of Aymara speakers are ex- vices for the poor. Experience shows that a social tremely poor; among Quechua speakers, 32 per- investment fund is most appropriate where exist- cent are extremely poor. Targeting all Aymara and ing infrastructure is in need of rehabilitation and Ouechua speakers will capture 41 percent of the where existing institutions are weak, as in Peru. In extremely poor. Since most non-Spanish speakers addition, a social fund is a suitable mechanism when: live in the sierra, geographic targeting would also reach them. Non-Spanish speaking households in * a country faces an emergency and needs other regions are not disproportionately poor. quick and tangible results; 5.8 Some characteristcs closely associated * the emergency is of a temporary nature, with poverty suggest the types of assistance e.g., policies are in place that will ensure which would manly benefit the poor. Nearly all growth and redistribution in the medium (82 percent ) households which draw their water from wells are poor (26 percent are extremely 1. The foUowing discussion is drawn from 'Easing the Poor poor). Thus, a program to improve water supply through EconominCrisis and Adjustment -The Story of Bolivia's for well-users would benefit primarily poor house- Emergency Social Fund' by Jorgenson, Grosh and Schacter. Latin America and the Caribbean Technical Department, Regional holds. Other housing characteristics closely associ- Studies Program, Report No. 3. and the Povety Reduction ated with poverty include the use of kerosene and Handbook, World Bank 1992 52 to long term; activities to benefit the poor. It is intended to be a * the country needs a social safety net be- short-te*rm response to worsening poverty until the cause social services are weak; capacity of the Ministries of Health and Education * the agency can be allowed to work with as is sufficiently strengthened. FONCODES finances broad a range of institutions as possible; small projects (thus primarily rehabilitation/up- * overall policies favor private sector devel- grading of facilities, not new construction) and re- opment; and gional governments have an advisory role in its a willingness exists to accept market based operation, including project selection. solutions, i.e. when there is not a "planner knows best" attitude. 5.13 Progress in making FONCODES fully op- erational was slow and initially there was confu- 5.10 Peru meets these conditions and thus it sion over whether the agency was going to be a would appear that a social fund could play a useful "demand-drive" or a "top-down" operation which and important role in the poverty alleviation strat- adversely affected the quality of some projects. - ow- egy. Yet, social funds involve tradeoffs. Since so- ever, in mid-1992 perfamance began to improve. cial funds are demand-driven, projects risk not be- ing integrated with investment priorities. In Peru, 5.14 REGIONAL COMPENSATION FUND. this issue may not be critical. Investment spending The Regional Compensation Fund (FCR) has the by central ministries is almost nonexistent because potential to contribute to a poverty alleviation of the fiscal austerity program and the decentrali- strategy. This fund was created by the January zation of social service provision. A social fund is 1990 Law of Regional Government Financing to unlikely to reach key vulnerable groups (for ex- finance regional capital spending. Until now, the ample, mothers and children), although they are FCR has been financed on the basis of a formula - likely to benefit from the rehabilitation of infra- 8 percent of Treasury resources and 25 percent of structure. This is inherent in a reliance on demand- the revenue from the general sales tax. The distri- driven and market mechanisms. Thus, a social bution of these funds to the regions has been based fund would need to be complemented by interven- on a formula as well. Half of the funds are allo- tions in education, health and nutrition. cated equally to all regions and the other half in accordance with population size. No attempt is 5.11 Experience with social funds in other made to channel more resources to poorer areas. A countries indicates that effectiveness depends pri- change in this formula to enable the fund to play a manly on the capacity to select the right projects role in poverty reduction would only be feasible if which in turn depends on the quality of staff and tax revenues increase and after fiscal stabilization their independence from political pressures. Be- is achieved. cause social funds are "wholesalet operations, ad- equate supervision a-id monitoing of sub-projects 5.15 THE ROLE FOR NGOs. The magnitude is essential. and seriousness of the poverty facing Peru call for the active participation of all resources, including NGOs. 5.12 THE NATIONAL FUND FOR SOCIAL In 1990, NGOs mobilized between $170 million and COMPENSATION AND DEVELOPMENT. In $200 million in external funding. The United States August 1991 the Pemvian Govermnent established channelled about $100 million through NGOs a social investment fund, the National Fund for Qarly in the foam of food ass-stance); Holland - $20 Social Compensation and Development million; Cnad2, Germany and Italy - $10 million (FONCODES). It is a temporary public institution each and Switzerland - $4 million. NGOs have a with technical, administrative and financial au- comparative advantage in mobilizing extenal re- tonomy which finances projects proposed by gov- sources becase of their fexibiliy ani their ability to ernment agencies, NGOs and community-based respond to donor priorities. organizations. The focus is on employment gen- eration, but FONCODES also funds projects in bealth, food assistance, basic education and other 2 Cada esimate i fo 1991. 53 5.16 NGOs are also able to reach underserved the Vaso de Leche. An estimated 23 percent of populations groups effectively. NOOs often pro- NGOs work in health and nutrition. Some operate vide social services to populations which have in- community health posts in response to community adequate access to state services due to terrorism demand. NMOs in health and nutrition are flexible or emergency situations. In 1990 NMOs partici- and able to experiment with a variety of models for pated actively in the National Drought Thnergency service provision, cost recovery and information Program, the Socal Emergency Program and the management. NOO activity in education is con- school feeding initiative, La Escuela Defiende La centrated in non-formal education. Vida. NGO participation in the drought program demonstrated their ability to operate even in secu- 5.20 While NGOs operate throughout tlh coun- rity emergency zones. The Social Emergency Pro- try, they are concentrated in Lima and lack a gram demonstrated their ability to mobilize effots sttong presence in the selva. DESCO (Center for rapidly behind an emergency initiative. NGO par- the Study and Promotion of Development) esti- ticipation in La Escuela Defiende La Vida enabled mates that nearly 60 percent of NGOs are based in this program to expand rapidly and provide rations Lima, another 12 percent in Cusco and Puno and 5 at low cost. percent in Arequipa. Since Uma NGOs often oper- ate in other areas of the country, concentration in 5.17 CARITAS, the social service arm of the terms of service areas is not as pronounced. Nearly Catholic Church, has a particularly strong com- half of NGOs operate only in urban areas, another parative advantage in reaching underserved popu- fourth operate only in rural areas and one-fourth lations because it is the only institution other than operate in both areas. the state which can draw upon a nationwide net- work. This presence extends to areas where gov- 5.21 NGOs are constrained by vulnerability to ernment activity is minimal and other NGOs are donor influence and weakness in formulating not active, such as isolated regions of the selva and policy proposals. As NGOs mobilize resources in- sierra. CARTfAS' participation has proven central dividually or as small consortia, the sector lacks a to many large-e emergency rehabilitadon efft mechanism to ensure that resources are directed to the highest priority target groups or activities. In- 5.18 NGOs are a strong constituency for pov- volvement at the micro level leads to difficulties in erty alleviation goals and programs. In many coun- seeing the broad picture and in formulating far ties, poverty alleviation initiatives have failed be- reaching policy proposals. cause beneficiaries lacked a strong political voice. In the last five years, NGOs in Peru have devel- 5.22 Collaboration between the Government oped coordinating bodies which strengthen the ad- and NOOs is constrained by real and perceived vocacy function by channelling communications barries. The dispersion of many Government pro- and providing fora for discussion. The National grams over a broad range of state institutions Association of Centers registers 22 such NOO net- makes NGO entry into the process difficult. Per- works. The advocacy role of NGOs is strengthened sonalistic management of some government pro- by their ability to maintain communications with grams makes collaboration with NGOs dependent the poor. While NOOs do not "epesent" the poor, on the will of individual managers rather than on they often serve as a channel of communications institutional mchanisms. NGOs are not organized enabling the poor to express their concerns. as a sector and they lack the mechanisms to plan and establish collective priorities for spending or 5.19 NOOs are numerous and operate in many impact evaluations. Their actions are frequently sectors and areas of the country. At least 250 not motivated by long term analysis and planning. NGOs are active in health and nutrition, education They differ widely in their institutional, manage- and food assistance. They also assist in the institu- ment and administrative capabilities, and their tion,al development of local governments. NGO ability au analyze problems and propose policies. collaboration with municipal governments has They lack a clear vision of their operational capacity been instrumental in intmducing progms such as both individually and collectively. They are not 54 operational in all areas of the country with severe many of them innocent victims caught in the poverty problems. crossfir of Latin America's most violent and bloody guerrilla movement. Community orniza- 5.23 Perceived barriers are more imporant than tions and the workns of local and central goven- actual anes in constainig Govemment-NGO col- ments have been severely affected. In incrasingly laboration. Govemment staff do not see NOOs as large areas, the central Government is unable to partners in the identification of national priorities provide basic services of law and order, much less in poverty alleviation nor as subcontactos to ex- provide social services. pand the Government's implementation capacity in achieving these goals. They perceive NGOs as Poew Ally Iaton Progm of the Govenient competitors for a fixed level of resources and con- trol. They object to competing with agencies not 5.26 POVERTY ALLEVIATION SJTRAT- bound by the constraints they face. Likewise, EGY. The Govemment prepared a poverty allevia- NOOs mistrust Govenmden motivation for greater tion stategy in 1992. It is generally consistnt with collaboration. They are concemed about the state the findings and recommendations of the analysis tuning over inmpossible tasks to NMOs in order to conined in this report. The stategy sets clear and avoid accountability for failure. They are reluctant appropriate priorities for a poverty alleviation pro- to share information with Government agencies gram in Peru, thereby providing a framework for becase they fear the Govement wants to control poverty reduction measures, both for the Govern- their activities. ment and donors. Toe challenge and test of the Government's resolve will be the extent to which 5.24 Wberever NGOs have a comparative ad- both the design and execution of specific projects vantage, the Government should be willing to mo- are consistent with the principles set out in the bilize and channel resources through them. Several poverty alleviation strategy. steps would improve NGO participation in Peru's poverty alleviation strategy. The govenmment and 5.27 The strategy recognizes that the allevia- NG0s could work to determine the comprative ton of povety i Peru demands essentially an eco- advantages of NGOs by regions, sectors and popu- nomic strategy The recovery of the economy, lation groups. With NOG participation, the gov- based on a progm of stabilization and liberaliza- ernment coud define the areas for autonomous tion measums, is crucial for the attack on poverty. NGO activity and determine which activities re- The objective set forth is to improve the living quire coordination. Ihe goverment and NOOs conditionsof the extemely poor through progms could also determine jointy the magnitude of pro- in the areas of food assistance, health, education grams and projects which NOOs are capable of and employment generation projects. underaking. The govermuent should establish dear and efficient mechnisms for NGO colabo- 5.28 The taret group for the Government's ration. NGOs should avoid terial and sectoral poverty alleviation efforts are the extremely poor. isolation which leads to duplication of efforts. The goal is to reduce the incidence of extreme Emerging NGO consortia provide one mechanism poverty fom the ament level of about 20 percent which should be suppoed to foster greater coordi- to 15 pere by 1995. The main targeting mecha- nation, dialogue and joint planning with the state. nism would be geography. More detailed goals for 1995 are also set in the areas of health, education Securiy Constaint and employment generation. In order to address the problems of extreme poverty in the country the 5.25 The task of improving social services in strategy outlines 5 more specific objectives many rural areas is made much more difficult by the violent activities of the terrorist orgization, * Generate employment and income in rural Sendero Luminoso (Shining Path). Since Sendero and marginal urban areas through projects launched its military campaign in May 1980, the focusing on social infiasucurendsupport resulting conflict has claimed ovr 24,000 lives, to production; 55 * Provide food assistnce in order to ensure 5.31 In the area of heal, the main lines of ac- that the basic requirements of the most tion include restoring a system for monitoring the vulnerable groups are met; health status of children; promoting the partic- ipation of communities in preventive activities; * Improve the coverage and quality of pri- improving pre- and post-natal care and promoting mary and preventive health services with breastfeeding, and improving the quality and effi- an emphsis on rural and margia uba ciency of services through trmining programs for areas, with a view to contrbuting to the health pesonel. Coverage of primary and preven- reduction of infant morbidity-mortality tive services would be increased through an expan- and the protection of the health of poor sion of the network of health services in women; undetseved zones. Related to that, existing infra- structure (hospitals, health posts and health cen- * Improve the efficiency and quality of edu- ters) would be rehabilitated with an emphasis on cation especially at the primary level in health poss and centers. There would be coordina- rural and urban marginal areas; tion with the agencies responsible for sanitation in order to provide services to poor areas. Attention * Meet the basic needs of school-age chil- to the problems which cholera has generated also dren through school feeding pwrgams. would be strengthened. distribution of texts and teaching materal and the needs of adults through literacy 5.32 In the area of nutrion, the principal lines programs; and of action include rationalizing and improving food assistance programs so that they reach the target - Provide financial support through population; increasing the nutritional standards of FONCODES to activities engaged in by food assistance; and implementing education pro- the poor. grams and a system to monitor nutrition levels. 5.29 The Government envisages a major role 533 For education, the strategy proposes: to for FONCODES in the implementation of this reduce the illiteracy rate, especially in rural area stregy. There is explicit recognition that the strat- and among women; to lower repetition and drop- egy implies an increase in the volume and effi- out rates and to expand pre-schools in poor areas; ciency of social spending by the Government, the to improve quality through teacher training and up- former to be achieved parly through a reallocation grading infrastructure and teaching methods; to of spending toward social investments& Social ex- integrate the community and the pnvate sector, penditures also would be oriented more to the and to orient the system more to the needs of the poor. In addtion to an effective FONCODES, this labor market. Education would also play a more would require s_trgthening the services provided active role in supportng the resolution of other so- by the Ministries of Education and Health and cial problems such as malnutrition and poverty. other agencies to the poor in Pem. Concldusion 5.30 The poverty alleviation strategy sets out principal lines of action in three areas: employ- 5.34 There are two sources of financing for the ment generation; health, food assistance and nutri- poverty alleviation strategy. The first is govem- tion; and education. In the area of employmet ment resources and the second is donor resources. geeration, the focus is on providing income eam- Public resources will ccntinue to be constrained ing opportunities and/or food-for-work progams over the next several yeas because of the stabiliza- for the poor in rural and marginal urban areas tion progam and the time it will take to restore tax thrwough projects in social and productive infra- revenues. However, in order to attract sufficient struct Small enterprises would also be assisted donor resources the Govemment must demonstrate by deregulation, as well as taining and credit. clearly its own commitment to poverty alleviation. 56 In 1990 it is esftimated that total govenunent spend- larly in the shot-run. Measures are also needed to ing on health and education reached only 2.2 per- protect vulnerable groups and to ensure that the cent of GDP, well below the average for Latin poor are able to take advantage of the greater op- America. It is recommended that over the next portunities in the reformed economy. In order to three years the Government take steps to improve address these latter needs, this report has examined the cost-effectiveness of public spending for social the profile of the poor in Peru and recommended services and review the possibility of reallocating priority policies and progrms targeted to them resources from the tertiary level to the primary The Government has made a start in this area. Its level. As tax reform and the measures to strengthen poverty alleviation strategy sets clear and appro- tax admiis ton aise revenue generation, it is priate priorities and goals for poverty reduction ef- also recommended that the Government endeavor forts within a framework of a contindiation of eco- to increase the resources allocated to health and nomic policies that would maintain macroeco- education. Spending on education and health of nomic stability and promote growt The challenge about four percent of GDP is the average for Latin and test of the Government's resolve will be to America and about the level that was spent in Peru what extent current and future policies and pro- duing the first half of the 1970's. grams are governed by that strategy. The recent improvement in FONCODES is an encouraging 535 The Government of Peru has taken an un- sign. But in order to ensure that the poor reap the portant step to reduce poverty in the country. Over benefits of adjustment, the Govenment should the medium to long-run what is needed to aUleviate strengthen the social services most cntical for the high levels of poverty is broad-based growth. them and provide more effective safety nets for the That is the objective of the stabilization and adjust- most vulnerable in the country. ment prograL However, it is not enough, particu- 57 ibliography AID. "Analisis del Sector Salud en el Peru. 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Cbiroque, Sigfredo. -Evolucion del Poder Adqusitivo World Bank, Perw Economic and Sector Reforms to del Docente Peruano: 1980-1991-" (Unpublished) Sustain Stabiliation ad Lay the Founda for De- nsituto de Pedagogia Popular, 1991. wvopnent White Cover Economic Report Cobun, J, Bitran R., Griffin, C Levine, R. and Grosh, Margaret, Social Spending in Latin America: RobeR,R Aswsesn ofHealth Sytems, Ihe Story of the 1980's. Discussion Paper No. 106. Financig and Policy Opwons inArequa Regin, The World Bank, 1991. Pera HFS Technical Report No. 3 AID, February Gro, Marget Unpublished notes on a taxonomy of 1991. targeting mechanisms and their costs and outcomes. Cocwhane, Susan H. The Effes of Education on Fer- February 1992. tility and Mortality." Education and Training Gra, Mare "The Jamaica Food Stamps Progra". Department Discussion Paper No. 26. The World World Bank LATHR. June 1990. Bank, PHR1E. Washington, D. C., 1986. Jorgensen, Steen, Grosh, Marpgret and Schacter, Mark" ComisWnEconomicaParaAmericLatinoyel Caribe Easing the Poor through Economic Crisis and Ad- (CEPAL), Magniatd de la Pobreza en America justment - The Story of Bolivia's Emergency Social 59 Fund". Latih American and Canibean Teecnical tific Publication No. 524, Washington, 1990. Deparment Regional Studies Proam, Repot no.3. Pavone, and Petters M., "Economic Impact of Cholera INEI. Direocion Tecnica de Indicadores Economicos. in Peru in 1991", WHO/PAHO Study Perm Compendlo Estadistco 1989-990. UAms I=ta M. "Efectos de la crisis economica en los Septiembre 1990. Servicios de Salud Matemo e Infantil y en sU INEI. Direccion Nacional de Estadisticas Basicas. poblacion. Peru 1985-1990." OPS, Lima, Mayo "Indicadores Sociales. Boletin No. 2 Uma, 1991. Septiembre 1990. PNUDIJNP. La Pobreza en el Peru: Diagnostico y Instituto Cuanto Ajuste y Economia Familiar, 1985- Propuestas dePoiticas. Bogota, 1990. 1990, Lima, 1991 Psacharopoulos, G."The Contribution of Education to Lopez de Castilla, Marta, Oriheula, Ana Maria, and Economic Growth. International Comparisons." In Chiroque, Sigfredo. "Maestros Rurales." IPP, Lima Kendrick, J. W. (ed) International Comparisons of 1990. Productvity and Causes ofthe Slowdown American Lopez de Castilla, Marta, Trapnell, Lucy, and Rengifo, Enterpre Institute/Ballinger Publishing Co. Cam- Moiso.. "Ser maestro en La Amazona." IPP, bridge. 1984. Lima 1989. INIDE. Quinche, Daniel et al. "Documento de Base: Situacion y Mendoza I. "Proyecto de Apoyo a is Gestion Local del Perspectivas de la Formacion Magisterial en el Peru: Programa Social de Emergecia en Salud, Nutricion Pimer Seminario Nacional Sobre Fonnacion Magis- y Saneamiento Ambiental. Informe Final." OPS, terial", LUia, Per, 1991. Umr, Febrero 1991. Schiefelbein, E. And Heikkinen, S. Peru: Access, Rep- Ministry of Education. Situacion de la Educacion en los etition and Efficiency in Prinauy Educain Centros Educativos Unitarios del Departamento de OREALC, October, 1991 Arquipa. Senado de Is Republica. "Encuesta de Opinion: Ministerio de Salud. Haca un Sistema Na cional Violencia y Pacificacion en el Peru." Lima, Abril Reglonalzado e Integrado de Salud Lma, Peru, 1989. Enero 1991. Stelcner, M., Arriagada, A. and Moock, P. Wage Aeter- Ministerio de Salud I OPS / UNICEF / USAID. mnnants and SchoolAttaimnent among Men in Perm "Malnutricion por microutrientes en el Peru" Lima, LSMS Working paper No. 38. The World Bank, Agosto 1991. 1988. Ministerio de Salud. "Boletin lformativo sobre la UNICEF, (Comite de Coordinacion del Programs de Epidemia del Colera en Peru." lima, Mayo 1991. Cooperacion PERU-UNICEF). Plan deAccionpor Ministerio de Salud. Oficina General de Planificacion. la Infanca: Proridades Sociales del Desarrollo Evauacion de la Estrategra deAtencionPrimaria de Hwuano, la Reconstruccion Nacional y la Paz Saludu Peru 1988-1990. Lima, 1991. ULms, Junio 1991. Ministerio de Salud. La Epidemia del Cokra en el UNICEF. Estado Mundial de la Infancia 1991. New Peru. Lima, Junio 1991. York, USA, 1991. Ministerio de Salud del Peru. Plan Operativo 1991. UNICEF. ElAjuste SociaL Perum Hacia un Desarrollo Direccion General de Salud Integral. Direccion EsenciaL Lima, 1991. Ejecutiva de Crecimiento y Desarrollo. UNICEF. "La Infancia, la Pobreza Y la Mujer en el Ministerio de Salud del Peru y la OPS.Analisis de los Peru: Analisis de Situacion." Uima, 1991. Recursos Institcionales en Alimentacion y UNICEF. (Carlson, Beverly and Wardlaw, Tessa) A Nutriion del Sector Salud Peru, 1988. Globat Regional and Country Assessment of Child Ministerio de Salud del Peru y la OPS. Fornacion de Mabarion Staff Wording Paper No. 7.1990. Personal de Salud en el Peru. LUma, Peru van de Walle, Dominique, Poverty and Inequalt in August, 1989. Latn America and tde Caribbean During 1970's Moock, P. and Bellew, R. Vocational and Technical and 1980's: An Overview oftdie Evidence. Education n Penu Working Papers, WPS 87, The Webb, R. and Fernandez Baca, G. Peru en Numeros World Bank, 1988. 1991. E4tonial Navarete, ULma, Abril 1991. Newman, Jorgensen and Pradham, "How Did Workers World Bank. Primary Educadon. A World Bank Policy Benefit From Bolivia's Social Fund?", 7he World Paper. The World Bank, Washington, DC., 1990. BankEconomic Review, May 1991, volume 5, No. 2, World Bank. World Development Report 1991. The pp 367-393. Challenges of Development The World Bank/Ox- Ohno, Izumi, "Peru Overview of FY 1991 Budget and ford University Press. Washington, D. C. 1991. Social Expendiures" World Bank, February 1991. Yamada, Gustavo. "Peru's Poverty Profile with the OPS. Las Condiciones de Salud en lasAmericas. Scien- Available Data" unpublished working paper pre- 60 pared for the World Batk. August 1991. Yamada, Gustavo. "Peru's Glass of MilM Program" us- Yamada, Goustavo. 'Peru's Feeding and Nutrition PFo- published working paper prepaed for the World gram for High Risk Families (PANFAR)r unpub. Bank. July t991. Lished working paper prepared for the World Bank. July 1991. Yamada, Gustavo. -Peru's Poplr Kitchens" unpub. lished workig paper pepard for the World Bank July 1991. 61 PERU POVERTY ASMNT AND SOCLAL POLICIES AND PROGRAMS FOR TH POOR I Am= A ... .. .... . . wow -Zsi ........ .. ... .......... M-,,s`*Me,-M-,--,:,:K *s:s: :3:S**AR.W ..... ..... U -M AN .......... ....... ...... .... ... . ...... O hi ..........* V W, iX 65 . l i! S l |ii S .Eg s E ! | = | ! ! ~ ~ ~ ~ ~ ' E~~~~~'r i| *e= l | 4 66 Anex B RECENT REPSEARCH ON POVERTY IN PERU Bamo Central de 'Docmlet on Banco nl dLg ya, Mms of Health, Poverty (unprocessed workig paper, 1990). St al. Proyecto Salud y Seguidad Socila Asse 1985186 Peru Living Standards (1991). Idcludes 3 dunt. Docum_n Survey. Methodology for caLculation of No.1 is a Mapa de Sad (1988). Comparison poverty line differs fom most other studies. is made of differnt parts of the health systm The authors converted the physical item of as estmated by prwviders of sices and the food consumption ino their equivalent in resuts of the 1985/86 PISS, Constucts a calories for each individual. A regrion was map of the production of health services in nm between those caleoies and the regisred differe regions of the couy. Con)uslon per capia food expendiu and t was used to i that in general the healh system is not esimate the expnditures on food needed to producing adequate services. Estimates haut a flulfl the required daily calories of 2,900 for quart of the population Is unco d by an adult equivalent. Paper also inctudes a health seices. Doc_uet No. 2 is "Eectos basic needs assessment. Auth lculate the D ibutivos del Gastc Publico en Salud cntrbuDt tDo poverty of various factors - Conclusion i hat the provsio of public education, occpation, area of residence, etc. health services tends to alleviate poverty in The document also reviews several urban areas, but not in rua areas. Poor (not employment progams in Latn America, extreme poor) bendit significantlyfrom public including the PArT, and food assistance health services becaem they resid mostly In programs in Pen:. urban areas. Total impact of public spending in health on income dubon is not Natioal PEa6 Institute and UNDP. La sificant. Docum No. 3 is ctos Pobreis en d Peru: Diagnostc y Dsrbutvos del Programa Enfeedad- opuests de PoNUca (1990). Analyzes Materidad del InSto Peuano de Segurd characterisi of povety in 1986 using the Soclal. This prgm only covers 20 percet 1985186 Peru Liing Standard Survey and of the popation and only 6 percent in the trends since 1981. Combines use of povety lowest quintile or in rural areas. Also line and basic needs Recomme", diues the impact of cial secuity beft progams to address poverty, and contrbis on the distrbuion of income. Finding is that it slightly lessen Insdtu ,Ajuste yEconomla FamWi income inequalities. 1965-190 (1990). Examines the Impact of eoonomic trends between 1985 and 1990 on World dL A series of studies basd on the houseold conumption in Lima comparing 1985/86 PLSS were published as Ivg iormaton from two Peru livig Standards Standdss StudyWoringPaper. Sureys (1985/86 and 1990). Also eaines eey covered topics such as poverty proffle, the Impact of the measwures taken by the labor markets, and socia service. Govenm t in August 1990 on low and middle-income households in Lima using data from another updaft of the PLSS. 67 Annex C Calcuton of Poverty LUes 1. Two estimates of the povet line to meet t calorie and protein eqirements have been used in this report. Both ae becase conumption patterns and the based on the capacity of a household to availabili of certai food items are quito consume a basic food baset. - Households differen from the other egions of the are classified as extremelv poor if their total county. In order to select the specific expeditus are less thn the cost of a basic products and the ditbution of osumption food basket. Households are classified as over broad categories (meat, vegetables, gM if their expenditus are less than the fiuits, et.), the consumption patterns of cost of a basic commodity basket inchuding small farmers in the siera as shown in the food and non-food items. In order to define ENCA (1971-72) household survey were the laKtter poverty line, the expenditure used as a model. The resulting basket neceossay to purchase a basic food basket supplies 2241 calories and 55 was inflated by a factor to take into account grams/person/day). The composition of non-food iems. The factor was determined both the Liur and the nual siewa baskets by locating the decile in which the mean was checked against acual food purcas expditure on food was closest to the cost pattems of survey respondeats and both of the basic food baket. Then the cost oi were found to reflect cumnt patterns among the basic food basket was scaled up using low-income households in tbhes areas. the same proportion of food/non-food Deails are prvided in Table 4. The basket exenditur. Region-specific factors for the was then vahled using the averg prices of food/non-food ratio were used to reflect four cities in the sierra, weighted by the acua expealitu patteuns. Thus the popldation of each. The broad consistency expenditure level at which households are of these baskets with curent consumption classified as poor vates by region because pattens was checked with data fram the of dfferences in both prices and 1991 Living Standards Survey and modfied conumption patters. accordingly. 2. The calculation of the basic food 3. Both the Lima (and urba coast baket and its cost also differed slihgtly and the sierra food baskets rreset depending on the region. In the case of economic mes to meet mtnal Lima, the basic food basket determined by reqiements taldng into account the the National Isitue of Ntion (INAN) coumption patterns among lower icome was used. It provides 2,169 calories and koseholds. The baskets are meat to 62.3 gams of protein per person.' These provide a reasonable guide to the level of levels are similar to the amount of calories expeiiture reqwired by households to meet and proteins in the consumption basket used their mntrional rqmnents. Neverless, in the earlier CEPAL work (2155 calories. thse baskets do not necessarily rpresent and 58 grams of protein/day.2 The INAN the le"t expensive means to meet basket reflec t consumption patterns nutitional reqiements. Thus howhlds found among Lima laborers in the 1971-72 with lower food expendures could ENCA (Encuesta Nacional de Consumo conceivably meet the same mnonal AHmntai) and is widely used in Lima requirebents through more e tfficen among both private and public sector pur1hases. ageies. For the urban coast, the same comosition of the basket was used, but 4. In order to facilitate oompaD products were valued at the average prices across regions aU the baskets wero then of three cities in the region weighted by expesd in prices of Lima for the first populatiao. For the sierra it was necessary week of October 1991. to modity the composition of products used 1. The calculation of requimnents for the indiviual takes into account the age and geder composition of fth population. 2. Magn ude de la Pobrea en Ated#,a Laud en los Anos Ochea, CEPAL 1990 68 Ta 1: P -.: Povrt Lie for Extem Poo an Poo b Reglon Exeom Povty Limn 11 Povwty Urno 2! "w Saba) (New Se..) Unadjusted 31 Adjuted 41 31 Adjuw 41 Uka 315 SOO 617 979 UrbanCoast 315 492 53m; 833 Urban Sirra 258 433 488 786 Rural SIera 258 488 372 704 Nowt i bpea in hns Ptiw OeO_ 1S1 11 Cgt fd boded bedmet p o epkulyw R Ct dof uudl bade w epltuse a# Heusebel .xp.sdbAom idie by Iwmd I. Tab 2: PE.: Por Ut L_s Rati to Expend Olstdn Md Mm by Rigion Dade Rag 2! Ptyt. 1I Poverty Uiw Poer1 POVIh Per Capul Fll !p PA_N (ewSabd New So,) La" Lime Exeendbs Mom Em. Mm Exm. ULa 500 979 9 V-V- 1276 40% 77% Uban Coast 492 833 Il-ll VI-VI 925 63% 90% Uban Sr 433 786 I1II1 V-VI 900 48% 80% Rurd Sierra 488 704 114N1 VII.4X 534 91% 132% NoW. r- we.emm In Lb_ pd*n Osu*e IW9 21 on A_S 2/ Bond on e-sind expenitm dIebutsn Tabl 3: BasIc Food Bat for Lmnd iw o Coast of the HNaonal Instte for Food and Nutdton (INA) Candad Producto Recommed. Leche en Polvo 2 tros Huevos 2 urJd. Higado 0.25 Kg. Jurel 0.50 Kg. Zapdb 1,0 Kg. Tomate 0.2 Kg. Ajos 0,015 Kg. PorejIl 0,03 Kg. Pina 0,30 Kg. Naranjs 0,25 Kg. Pbtano 3 Unid. Papa Blanca 1,0 Kg. Arroz Cornente 0,84 Kg. Pan Tolete 19Unid. Acetos Compuseo 0.18 Lt Margarina 0,05 Kg. Azucur Blanca 0,30 Kg. Sol 0,03 Kg. Caneta A Granel 0,01 Kg. Te(Cajax57 grs)2/ 0,02 Kg. SI. 5.25S Nate: Oe food bssketfora f coomposod of husabnd, AF* nd4 4den (2160 ec*ike e 62.3 vee of protaI ps parasoJ. * Lime prke hI October 1989 new soles 70 Tabe 4: Basic Food Basket for the Silra Clanitdad Cmnidad Requeuida Requwida por peona (am.) ,pr famia tars.) Productos Rubro Producto Cames 45 Cordeso 7.5 45 Vacuno 2.5 15 Polio 2.5 15 Menudencias 5 30 Otras cames 7.5 45 Huevos 20 120 Leche v Defivados 25 Leche Fresca 20 120 Quesos 5 30 Vireas 50 Tomato 8.33 50 Col y colifor 12.5 75 Zapalto 4.17 25 Cebolla 16.67 100 Zanahoria 8.33 50 Frutas 75 Naranjas 25 150 Otras frutas (manzana) 50 300 Lqgumninosas 50 ArveJas 14.29 86 Frijoies 17.86 107 Habas 17.86 107 Tuberculos v Raices 497 Camote 15.27 92 00. y Ollueo 40.71 244 Papa 400 2400 Chuno 20.35 122 Otros ubercuilos 20.35 122 5ereales v pofivado" 327 Arroz 45.21 271 Cebada 33.9 203 Mai grano 71.58 249 Maiz fresco 22.6 136 Qulnius 11.3 68 Trigo 0. 14 181 Pan 100 600 Fideos 22.6 136 Azuc 60 Azucar blanea 16.8 101 Azucar rubla 43.2 259 Aggi,Us v Grasas 47 Mantecas 31.33 188 Aceite 15.67 94 Sl.3.96B AfOT,S to the bW_tVdthf /SWrt h eh _dbh_ *em th hwaa. sVwVG4 BA1171-72 Aw ms ,ed *4Ww. t M| t *AM ,A I4 and _ * h x .4 = J p p @.. gr -r .4..44.44. 34 .40 *tSt aXXX@X$@ t8 Tale 1.7 Educatin lBudgt bY FFaon aWd R8sh9L 1691 Unli) Region Sated" Maul Son TOl % nro Gnu s59160 687960 444083 8691203 8.7% 459.1 9.2% Anizonas 3190942 237330 177698 606270 4.7% 223.1 4.8% Nor atd" ddNlManon 10536460 1006531 660729 12235715 16.1% 736.2 15.8% Ucyll 1365911 83430 62573 1501914 2.0% 86.8 1.9% Inca 65696053 557970 41847s 7572501 9.9% 441.5 9.5% Sn Mardtn- La Llbeid 7058609 705528 461093 8223230 10.8% 512.0 11.0% LesULbe,adoes- Wed 7348468 544320 408241 8301029 10.9% 512.3 11.0% Andr" Aveli QCMe 7365327 828190 848144 9029661 11.9% 621.4 13.4% Chovn 4840814 3s86o3 269123 5468767 7.2% 315.9 6.8% Araup 4216448 45o540 231225 4931211 6.5% 287.2 6.2% Jose Cados MWueteod 7768136 507060 380296 8646491 11.4% 460.6 9.7% TOTAL 65722321 6966689 4419982 76108992 1000% 4s6.7 100.0% Souwe.: MIEb*te cb lduecl. Abn de Ovew'So cb Sbetar Imadon, 1991 TOW. 1.0 DOt*_um of Eduhata Budget by Funhton ed Reglon 1991 Sali MateWas Sendoe TOtal Region 82.8% 10.4% 6.7% 100.0% Gnu 88.5% 6.6% 4.8% 1000% Anmaona 86.1% 8.2% 5.6% 100.0% Nor Oiet del Mranon 90.3% 5.6% 4.2% 100.0% aely 87.1% 7.4% 5.S% 100.0% na 85.8% 8.6% 5.6% 100.0% Sn Martin- La Ubertad 88.5% 0.6% 4.9% 100.0% Los Lbobrtedoms - Wed 81.5% 9.2% 9.4% 100.0% Andr AveinoCcere 88.5% 6.6% 4.9% 100.0% Chown 85.6% 9.1% 5.3% 100.0% Arequipa 8U.7% 5.6% 4.4% 100.0% Muwum - Tao - Puno 86.4% 7.8% 6.8% 100.0% TOTAL Sowo.: Mbtatdr de Eduen.wL Pkn do Cbsw.nd del Sec*r Edwadan, 1991 Educscon, 191t TaWb 1.9 Educton Btuest by Lnc hem. 1991 Onduelm Pubic Treasury % Tota % 150325806 52.5% 150325806 S2.2% 84066177 29.4% 84066177 29.2% MOE Eudet (1) 517S8987 18.1% 61758987 18.0% Tnsfwrs to ODescnt bInstt (3) 86259629 23.1% 66259629 23.0% Talon to Unlverdee (31 84066177 29,4% 89586938 29.8% Not Budget MOE (1-2)- (4) 517586897 18.1% 53276848 18.S% Budge of Oecent Inst (5) 13596S641 47.5% 135965PA1 47.2% Budget of Unwvesi"e (6) 286291447 100.0% 288184208 100.0% Reional Govnmet m Tota Educaton Budget (4+5+7) Seoe: heJt r E _ n do Oeaa,ulo dot Setor leim_ 1991 110 Tab 1.10 Pen: bhuea Wlee of ? emv Edure 188 Tranion Rates e1 69-2 0e3 , 4 0-5 -6 Promtoton 02.5 73.0 76.1 80.1 03.5' 04.4 Repetion 31.5 21.4 10.9 16.1 1*.1 5.6 rpout 6 a 5 3.8 0.4 0 Tabe 1.11 Flow of* HWpodhee Studnt Cohet Sti In Number of Year 1 2 3 4 5 6 School Graduae 1 1000 1000 2 315 625 940 3 99 331 400 890 4 31 133 335 345 844 5 10 48 14 307 277 806 6 3 16 es 173 251 231 782 218 7 1 6 26 79 18S- 290 562 241 8 0 2 9 32 03 109 30s 16O e 0 1 3 12 41 87 143 82 10 0 0 1 4 16 39 6o 37 11 0 0 0 1 6 10 24 15 12 0 0 0 0 2 a 9 6 13 0 0 0 0 1 2 3 2 14 0 0 0 0 0 1 1 1 15 0 0 0 0 0 0 0 0 Student Yea. 14.0 116 167 955 911 800 6360 701 Promted 912 a54 801 765 761 761 4865 Rqepeate 460 248 212 154 147 45 1266 Dropouts 88 58 53 36 4 0 239 Years of Schooling per pmoed student 1.6 1.4 1.3 1.2 1.2 1.1 1.3 % Extb A8e G-1 G-2 6-3 604 0.5 0-0 Oneyeror more 31.5 48.2 56.9 63.8 69.0 71.3 Two yeas o more 9.9 17.7 25.5 31.6 37.8 39.6 Three Yoem or m 3.1 6.2 10.1 13.5 17.4 18.7 Perentage who Graduat 76.1 Prntage of Enteig Cohort who Grduat without Repeaftg 21.8 Percentag of Grduste. Graduatng who Repadng 28.7 Student Yea per Graduate 8.4 Average Number of Years In Primary Education 6.4 Average Nuber f Gtrade. Completed 4.9 InputlOut 1.4 Sow..: Sd _efe/s E and Heah,S. & Pot& Ac.., rsWs arnd Wyhr In pr&niy .d&wat1W. ORAALC, Octob 1991. N Table 1.12 PERU: Indicators of Intemal Effciency and Resources by Region Percentage % stdent Avwese Percentage % Schools with Repters ompleting # years to P tage Uncerffied no eletrkict Prmary Ed Grade 6 graduate literaes Teachors water, sewere Depwbents 1988 (8188 8188) 1981 1988 1978 Ayacucho 27.8% 28.3% 15.2 45.1% 64.9% 77.1% Huancavelka 27.2% 30.3% 15.8 44.2% 71.3% 81.9% Caamarca 22.7% 33.9% 15.3 35.4% 58.6% 80.5% Huanuco 29.6% 34.1% 14.7 32.4% 61.5% 83.4% ApuTmac 33.3% 39.5% 13.9 52.3% 51.7% 78.9% Ucayll 27.6% 41.1% 12.2 11.4% 58.5% 85.7% Amazonas 26.8% 41.4% 13.8 26.8% 53.8% 81.8% Loreto 31.6% 41.5% 14.2 15.0% 70.8% 85.6% Cuzco 26.6% 44.4% 11.9 37.2% 48.9% 61.2% San Matin 30.8% 50.3% 11.5 16.4% 61.5% 82.2% Madre de Dios 26.6% 50.8% 10.6 10.7% 72.5% 83.5% Puno 22.2% 53.8% 10.8 32.7% 60.5% 61.5% CalIlo 9.3% 56.3% 9.5 2.9% 47.4% 5.0% Pium 17.6% 57.9% 9.8 22.0% 62.9% 75.6% Junin 18.4% 58.1% 9.6 18.6% 48.1% 54.4% Ancash 25.7% 61.2% 9.9 28.4% 52.9% 72.2% La Ubertad 16.8% 61.4% 9.4 17.7% 33.6% 61.0% Pasco 22.1% 66.9% 8.9 22.4% 75.6% 70.2% Lambayeque 16.2% 67.1% 8.3 13.4% 51.7% 68.4% Moquegua 12.4% 72.4% 8.4 12.4% 34.1% 51.7% Tacna 11.9% 73.6% 7.9 8.9% 28.8% 37.4% Arequipa 12.9% 78.4% 7.7 10.8% 29.4% 38.9% Ica 13.4% 78.4% 8.2 6.8% 16.2% 37.9% Tumbes 20.1% 80.2% 7.9 8.5% 51.0% 69.0% Uma 10.1% 84.5% 7.0 4.5% 46.6% 22.5% Tota Peru 20.0% 57.0% 10.3 18.1% 51.2% 64.3% Sotace: ,Fwnar H. and Rosaes, J. EducacIn ww Mlr8do Head A dnro. Irno, IPP, 1990 Table 1.13 PERU: Students Achievement In Grade 6 by Regons and Sublect 1981 N8tional Schools Areas Reoions Subject Averae Public Prva Urban Rural Lma Costa Sierra 80h Mathematics Avg 7 7 11 7 8 9 9 5 6 % Faling 76% 81% 64% 72% 85% 63% 73% 93% 93% Langage Avg 14 14 17 15 13 16 14 13 15 % Failing 15% 19% 3% 10% 27% 7% 14% 24% 20% Natural Sciences Avg 13 14 17 14 12 18 15 11 14 % Failing 23% 29% 7% 16% 38% 8% 22% 46% 26% Social Sciences Avg 12 12 13 12 10 12 12 11 14 % Faiing 38% 41% 31% 36% 4E% 34% 33% 51% 45% Average 12 12 14 12 10 13 13 10 12 Source: Mkintry of Education. Diagnostico del Rendimiento Academico de los Estudlantes de Sexto Grado de EM. Lim, 1981 Table 1.14 CoMphavi Educatic dbatorms for Selected Latin Ameica Cmutdse _mvate pop Edutol Exp olm t AsS of 16+ As pwcet Pomfad I Totd Female GNP O Exp or"s Nt Grow Nt Sea ARGENTNA 1975 NA NA 2.5 9.5 108 90 54 42 27.2 1980 6.1 NA 3.6 16.1 106 94 Se 21.6 1S87' 4.6 6.0 1.9 8.9 115 74 40.8 BOUVIA 1975 M6.8 NA 3.5 NA 85 73 31 21 11.2 1980 NA NA 4.4 25.3 87 72 36 16 12.0 1987- 25.8 34.9 8.1 20.1 97 78 37 27 10.6 BRAZIL 1976 24.3 NA 3.0 NA 88 71 26 9 10.7 1980 25.5 NA 3.5 NA 99 81 34 14 11.9 1987- 22.3 23.5 4.5 17.7 95 84 38 16 10.9 CHILE 1975 NA NA 4.1 12.0 112 94 48 34 15.6 1980 8.9 NA 4.6 11.9 112 98 63 13.2 1987* 5.6 NA 3.6 15.3 102 89 74 56 17.8 COLOMBIA 1975 NA NA 2.2 16.4 118 39 8.0 1980 14.8 NA 1.9 14.3 128 75 44 10.6 1987' 11.9 12.9 2.7 22.4 122 73 56 13.6 ECUADOR 1975 NA NA 3.2 25.9 101 78 39 28 26.9 1980 19.8 NA 5.6 33.3 113 61 36.5 1987* 17.6 20.2 2.8 21.3 114 56 29.3 PARAGUAY 1975 NA NA 1.6 14.0 100 83 19 16 6.7 1980 12.6 NA 1.5 16.4 103 87 26 8.5 1987* 11.8 14.6 1.5 16.7 101 88 29 24 8.8 PERU 1975 27.6 38.2 3.5 17.6 113 46 14.6 1980 18.1 26.1 3.2 12.8 114 86 59 19.4 19870 13.0 20.1 2.4 16.4 118 87 64 25.5 URUGUAY 1975 6.1 NA 2.2 10.0 107 60 16.0 1980 NA NA 2.6 9.3 106 60 17.3 1987' 4.6 4.1 3.1 15.1 109 91 77 47.8 VENEZUELA 1975 NA NA 4.5 NA 100 81 45 35 18.1 1980 16.3 NA 4.4 14.7 109 86 41 34 21.4 19870 13.1 14.5 3.5 16.6 110 89 54 44 26.5 I*) 1987 or late Soures: UNESCO Stetstil Yeaubook. 1990 Peau: Peru en Numme.s 1991. CUANTO Wwod Bank. S"ol Indicators Date See Peru: Pem. Access, Repetion and EfficIency In 100nary Educton 114 Table 2.1 Reported Cases of Sdected Communicable Diseases 1985-1988 (Thousands) Ano Measles Tuborculosis Typhoid Malaria Hepatitis 1985 9.4 22.7 17.9 35 7.3 1986 6.1 24.7 17 36.9 7.3 1987 6.2 22.1 18.2 39.9 8.8 1988 5.8 28.7 20.6 35.2 6.9 1989 ^ 1 24.1 14.8 35.5 6.3 Sourw: MAs of meah, O0ke of 4WdmIkgv A'ovA,odInformatin Table 2.2 Evolution of Cholera Epidemic March - May 1991 Epidemhologkal Cases Hospitals Deahs Week N N % N % 5 901 255 28.3 12 1.3 6 11581 2030 17.5 50 0.4 7 16751 3959 23.6 47 0.3 8 16077 4576 28.5 92 0.6 9 14988 4743 31.6 82 0.5 10 19175 7504 39.1 155 0.8 11 19325 8570 44.8 201 1 12 19533 9440 48.3 231 1.2 13 16571 7776 47 148 0.9 14 16967 7532 44.4 156 0.9 15 12953 5622 43.7 108 0.8 16 11849 5319 44.9 122 1 17 9014 3943 43.7 121 1.3 18 8116 3504 43.2 99 1.2 19 6951 3051 43.9 132 1.9 20 6513 2399 36.8 105 1.6 21 5128 1760 34.3 106 2.1 22 4354 1311 30.1 79 1.8 23 3957 1803 45.6 73 1.8 24 2024 844 41.7 33 1.6 25 480 189 39.4 9 1.9 SORce: cuwa0. Peun aSme, 1991. * PrevblonbfenneUee 115 Table 2.3 Prevalence of Low Birth Weight Hospital Maria Auxdiadora Uma 1987-1990. Y"r Total Number of <2500 9. Births Births % 1987 2741 312 11.4 1988 4611 563 12.2 1989 4226 674 15.9 1990 4088 616 15.1 w) h0 nunmb 1991 Table 2.4 Coverage of Immunization Program for Chiklren under 1 1985-1990 ANTI- Year Polio DPT BCG SARAMPION 1985 33.3 33.8 32.4 34.6 1986 50.3 49.8 53.6 40.7 1987 44.7 42.6 61.3 35.2 1988 60.8 60.9 70.0 52.0 1989 58.8 58.3 61.8 52.1 1990 ' 60.0 59.0 71.0 53.0 1: M6 116 Table 2.5 Health Establishmnts and Beds 1985-1990 Health Health Year Hospitals Beds Centers Posts 1985 349 30032 859 1931 1986 353 30413 920 2600 1987 354 30629 963 2851 1988 368 35715 1017 3141 1989 368 35715 1019 3162 1990 368 35715 1019 3173 Sowe.: MAs of HWh Table 2Lo Distrbution of Hospitals and Beds by Provider 1988 Hosptals Beds Instituton n %n Public Sector 193 50 26070 80 Mln. of Health 129 33 16867 52 Social Securt 36 9 5661 17 Armed Fofces Pol. 15 4 2856 9 PublicSoc. Bee. 3 1 200 1 tP Ste 10 3 486 1 Prvate SecW 193 50 6447 20 Private CUnics 135 35 4502 14 Private Companis 41 11 914 3 Cooperatives 11 3 533 2 Chaitable Inst. 5 1 483 1 TOTAL 386 100 32517 100 SON".: MktY ofHKamm 117 TabW 2.7 Aviabily of Seletd Health Resource by Regon 1988 Per 1000 InhabIants Regon Beds Estblishments Doctors Nurses Amazonas 12 3.7 2.6 3.4 Ceceres 12.2 3.2 2.5 5.5 Arquipa 21.1 2.7 12.5 19.3 Chavin 8.8 2.5 2.5 1.4 Grau 8.8 1.7 2.6 2.2 Inca 7.5 2.4 1.5 4.4 Warl 11.9 3.3 4.1 3.1 Marategul 10.2 2.7 2.4 4.7 Maranon 7.1 2.1 0.4 4 S M-la Ubertad 11.8 3.2 7.9 5.6 Ucayal 9.8 5 1.9 0.5 Uma 24.8 1.1 23.8 13.1 callao 29.2 1.2 - 9.6 TOTAL 15.3 2.2 9.5 7.4 hwJds hosp4tas end heah contos. d post SaWee: Mfib*y - Helh Tabl 2.8 Human Resource I Heat 1985-1990 Year Doctors Nurses Obstetrician Pharmacist 1985 18103 13951 3114 4541 1986 19635 14709 2868 5350 1987 20031 15429 3137 5567 1988 20979 16140 3338 5875 1989 21856 15796 3437 6113 1990 * 22900 17600 3900 6400 * Auvisl.nbthEwte So woe: Mh*try of f. WU, Gwwl Ofeo of StiSw 118 Table 2.9 Human Resources In Health Iper 10.000 lnhabltants) Year Doctors Nurses Obstetrical Pharmacists 1985 9.2 7.1 1.6 2.3 1986 9.7 7.1 1.4 2.7 1987 9.6 7.4 1.5 2.7 1988 9.9 7.6 1.6 2.8 1989 10 7.3 1.7 2.8 1990 10.2 7.9 1.7 2.8 * fotvalone Numb.,s Sowo: MtE1 Ststlc Copendiwn 1989-1980 Table 2.10 Supply of Human Resources for Basic Health 1990 Doctors Nurses Region Per 10,000 Inhb. Per 10,000 Inh. Coast 0.5 0.6 sierra 0.3 0.8 Jungle 0.5 0.3 Lima 1.1 0.3 TOTAL 0.6 0.5 Souwce: PETRMeA M. PAHO, May 1991 119 Table 2.11: Medical and Obstetrical Consultatfon per Hour Worked UDES, Uma 1988-1990 Year Medical ConsultantionlHour Obstetrical Consultation/Hour 1988 2.66 2.01 1989 2.23 2.07 1990 2.36 2.03 Average 2.44 2.04 120 Table 2.12: Health Services In the South of Lima 1988-1990 ActivIy 1988 1989 1990 %Chango ('000 miles) ('000 miles) ('000 miles) ('000 miles) Cons. Extema; 878 667 654 -25 Cons. Emergency 123 99 94 -24 Medical Attendants 709 708 491 -31 Hours Worked by Doctors 266 227 208 -22 Obstetrical Attendants 165 148 128 -22 Hours Worked by Obstetricians 82 71 63 -23 Hospitalizaton 19 17 17 -12 Laboratory Examinations 469 325 296 -37 X-Rays 49 28 19 -61 Presciptions 569 444 345 -39 121