The International Monetary Fund (IMF) says the government’s cash transfers for poor and vulnerable households effectively tackled extreme poverty during the first year of the Covid pandemic.

In a working paper released in Washington on Friday, the IMF noted that about 710,000 households — 2.8 million people — received cash from the Ministry of Social Affairs, Veterans and Youth Rehabilitation in 2020.

These subsidies averaged about US$45 a month which corresponded to about 33 percent of monthly household earnings for the poorest 25 percent. Many received cash until the end of 2020 — six to seven months on average — and parts of the scheme were expanded into 2021.

Without the cash transfers, the paper said, an estimated 17.3 percent of households would have seen their incomes fall below the international poverty line of US$1.9 per worker per day compared with 10 percent before the pandemic.

But “thanks to the transfer, the share of households living below the international poverty line is estimated to be only 12.6 percent,” the paper said.

“Furthermore, the cash transfer may have been able to lift 164,000 households out of income poverty, compared to the pre-pandemic baseline. Survey data collected during the pandemic confirms this.

“The percentage of households reporting some degree of food insecurity declined from 67 percent to 36 percent, between August and October 2020. Most of the transfers were spent on food and other necessities.”

At the same time, however, as many as 260,000 households may have fallen below the US$1.90 poverty line in 2020 but found themselves not covered by the cash-transfer scheme.

These “new poor” households — accounting for more than half of those estimated to be living below the poverty line — are typically urban and work in service industries.

“Urban workers may constitute a new pocket of poverty, more likely to draw down on savings and borrow extensively in the aftermath of the pandemic.”

Overall, the paper concluded that “the cash transfer scheme did very well in tackling the forms of extreme poverty which pre-dated the pandemic, by targeting households in the bottom deciles of the income distribution.”

“However, many of these households tend to be rural and living out of subsistence farming,” it said.

Source: Agency Kampuchea Press

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