Cablegate: 20 Million Colombians Live in Poverty: Good News

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UNCLAS SECTION 01 OF 02 BOGOTA 002805

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ELAB PGOV CO
SUBJECT: 20 MILLION COLOMBIANS LIVE IN POVERTY: GOOD NEWS
OR BAD?

1. (U) SUMMARY. In late August the GOC released 2008 poverty
figures showing 46 percent of Colombians live below the
poverty line, compared with 53.7 percent in 2002. Extreme
poverty declined from 19.7 percent to 17.8 percent over the
same period. Urban poverty reduction far outpaced that of
rural poverty, and inequality remained unchanged. While the
poverty trendline is moving in the right direction, critics
note that the GOC will not meet its poverty goals and lament
that the Uribe years of high economic growth have only
translated into modest gains against the scourge of poverty.
END SUMMARY.

WHAT DOES IT MEAN TO BE POOR IN COLOMBIA?
-----------------------------------------

2. (U) The 2008 figures were published along with results of
a joint effort by the National Statistics Agency (DANE), the
National Planning Department (DNP) and several noted
economists to make 2008 statistics comparable to 2005 and
earlier figures that used a different methodology. (NOTE: No
poverty statistics are available for 2006 or 2007. END
NOTE.) The poverty line of 270,000 pesos monthly
(approximately USD 135) per family member is based on a
traditional measure of income required to purchase a basket
of basic goods and services, as is the extreme poverty line
of 117,000 pesos (approximately USD 59).

3. (U) Based on these measures, Colombia's poverty rate
dropped from 53.7 percent in 2002 to 50.3 percent in 2005 and
to 46 percent in 2008. The extreme poverty rate fell from
19.7 percent in 2002 to 15.7 percent in 2005, but ticked back
up to 17.8 percent in 2008, primarily due to inflated food
prices in the first half of 2008.

4. (U) DNP Director Esteban Piedrahita noted that Colombia's
poverty and extreme poverty lines are among the highest in
Latin America. According to Piedrahita, using the region's
average poverty line would yield a poverty rate in Colombia
of 40 vice 46 percent.

URBAN POVERTY ERODES FASTER THAN RURAL
--------------------------------------

5. (U) The poverty rate in Colombia's 13 largest urban areas
(which account for 45 percent of the total population)
dropped from 40.3 percent in 2002 to 30.7 percent in 2008.
Extreme poverty in the largest urban areas dropped from 9.4
percent to 6.8 percent over the same period. While rural
poverty dropped at a significantly slower rate, income-based
poverty measures tend to overstate rural poverty, since they
do not account for food produced for one's own consumption.

INEQUALITY REMAINS UNCHANGED
----------------------------

6. (U) The latest numbers indicate a Colombia with the same
level of inequality it had when President Uribe took office.
Colombia's Gini coefficient (where 0 means absolute equality
and 1 means absolute inequality) in 2008 was the same 0.59 it
was in 2002. This continues to rank Colombia among the
highest levels of inequality in Latin America.

POVERTY DECREASE MODEST COMPARED TO HIGH GROWTH
--------------------------------------------- --

7. (SBU) During the period 2002-2008, Colombia's economy grew
an impressive 37 percent. However, this growth has not
translated into the decrease in poverty many economists and
policy-makers had hoped for. Alejandro Gaviria, Chair of the
Economics Department of Los Andes University noted that,
given these recent statistics, the GOC will not meet its goal
of reducing poverty to 29 percent by 2010. Fedesarrollo
think tank director Roberto Steiner criticized Uribe's
flagship anti-poverty program "Familias en Accion" for its
emphasis on urban poverty. He told us the program created a
"welfare dependence" among poor people that "served certain
electoral interests, but did not offer long-term solutions to
poverty."

BOGOTA 00002805 002 OF 002

8. (SBU) Defending GOC efforts, Piedrahita pointed to a
marked increase in access to government services and the
provision of direct food assistance to the extreme poor as
two significant steps in fighting the effects of poverty,
which, by definition, would not appear in income-measured
poverty statistics.
Brownfield

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