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Private sector and human-resource development in Georgia
	53.0	52.5	52.0	51.3b/
Urban	46.7	53.3	60.4	56.6	54.3	53.7
Rural	46.4	47.1	44.6	48.0	49.6	48.8
US$4.30 per capita/day at PPPc/	13.6	19.8	23.2	23.0	22.8	21.7
Recommended poverty line (baseline)	13.6	19.8	23.2	23.0	22.8	21.7
Urban	13.8	22.2	27.4	24.6	24.1	22.6
Rural	13.4	16.8	18.4	21.4	21.3	20.7
US$2.15 per capita/day at PPP c/	9.7	11.8	14.5	15.4	14.8	13.5
US$1.075 per capita/day at PPP c/	1.7	3.0	3.2	3.3	3.4	2.7
Source: SDS SGHH primary data and World Bank, see Georgia Poverty Update, Report No. 22350-GE.  Note:  The official poverty line uses a normative basket and CPI price data to cost it and is around 100 GEL (about US$50 at current exchange rate) per equivalent adult per month.  The recommended poverty line was developed jointly by the World Bank and SDS in 1998; it uses actual consumption patterns of the population and survey prices (its non-food component is fixed in real terms to 1996 and deflated using the CPI for non-food items); it is about 55 GEL (US$25) per month per equivalent adult.  The equivalence scale used in the official and recommended methodology is the scale developed by SDS and used in Georgia to determine the social assistance payments.  International poverty lines expressed in dollar terms (US$ in PPP) are per capita and use the latest (1996) revision of the World Bank, updated with the Georgia CPI.  All figures are averages of quarterly data.  a/ Preliminary estimate; corrections for changes in the Survey not made.  b/ Bank estimates using official methodology.  c/  Using 0.33 as PPP conversion factor.

Differential Impact of Rising Poverty.  IDA, in close collaboration with the State Department of Statistics, prepared a  Poverty Update covering the 1998-2000 period.  The study found that the increase in poverty affected various socioeconomic groups differently, with growing differentiation among the poor, and signs that the poorest became even poorer.  Poverty depth and severity increased in the observed period by 84 and 94 percent respectively.  Driven by the volatile economic environment and absence of an adequate safety net, vulnerability to poverty for the average household rose significantly, with female-headed households being the most vulnerable.  Although the extent of absolute poverty at any point in time remained around 20-24 percent, 40 percent of the population experienced poverty at least once during the year 1999-2000, and 60 percent of the population faced a real risk of experiencing poverty in the medium term.  The high degree of vulnerability of households led them to apply strategies which may tend to increase chronic (long-term) poverty (e.g., shifting to subsistence farming, or pulling children out of school).

Urban and Rural Poverty.  The trend in overall poverty reflects somewhat different developments in urban and rural poverty.  In 1997, rural and urban poverty incidence were almost the same.  In 1999, the urban poverty headcount doubled in comparison to 1997, whilst the rural headcount increased by 37.3 percent. Then in 2000, responding to the non-agricultural sector recovery after the Russian crisis, urban poverty dropped by 10.2 percent, stabilized in 2001 and declined further by 6.2 percent in 2002.  Because of the drought, rural poverty increased in 2000, remained unchanged in 2001 and only in 2002 decreased by 2.9 percent.  As a result, the difference between the urban and rural headcount has narrowed -- while in 1999, the urban poverty headcount was almost 50 percent over that in the rural population, in 2002 it was 9 percent higher.   

Determinants of Poverty. The Georgia Poverty Update identified that the strongest determinants of poverty risk in Georgia in the period between 1998 and 2000 were economic: employment status, sector of employment, ownership of productive assets and education.  It found an elevated poverty risk among urban households, households with an unemployed head and female headed households, as well as  children aged 7-15, the disabled, those with low levels of education, single pensioners and orphans were experiencing.  The working poor are becoming the majority, often employed in the informal sector with insecure, temporary and low productivity jobs.

Non-Income Indicators of Poverty.   Non-income indicators of poverty in Georgia, inherited from Soviet times, still compare favorably with those of countries with similar per capita income.  The UNDP 2003 Human Development Report ranks Georgia 88th among 175 nations.  However, Georgia faces a major challenge in sustaining these relatively favorable indicators.  Studies conducted by various international organizations (UNICEF, USAID, EC, etc.), indicate that there has been no improvement in the indicators during the 1990s.  In fact, maternal mortality rate, immunization rates, access to health and education, access to safe water and sanitation and other living conditions indicators have deteriorated and the quality of social services has worsened substantially in comparison to the pre-transition situation.

Internally Displaced People.  IDPs vulnerability to poverty is magnified by their lack of access to land.  Thus IDPs living in collective centers are 3½ times less likely to have access to land than the local population, and those living in private accommodations half as likely.  In addition, IDP’s rate of unemployment is very high -- 40% among IDPs living in collective centers.  Government benefits do seem, however, to be reaching the IDPs, with 80% to 90% receiving a government benefit.

Millennium Development Goals.  The estimates of Georgia’s prospects for achieving the Millennium Development Goals (MDGs) show a mixed picture based on Georgia’s current performance, as indicated in Table 2.1.2.

Table 2.1.2: Millennium Development Goals

Millennium Development Goal

Present Situation

Prospects for Achievement by 2015

Goal 1: Eradicate extreme poverty and hunger.

Target 1: Halve, between 1990 and 2015, the propor­tion of people whose income is less than $2.15 a day.

NOTE: While the MDG indicator and target include $1 a day, a higher poverty line such as $2.15 is considered more appropriate in ECA given the extra expenditure on heat, winter clothing and food. (“The Millennium Development Goals in ECA”, World Bank, forthcoming)

Target 2: Halve between 1990 and 2015, the proportion of people who suffer from hunger.

In 2002, the poverty incidence at the international poverty line of US$2.15  per capita/per month at PPP was 13.5 percent. 

While the exact  percentage of people suffering from hunger in Georgia is not known,  there is no evidence that would indicate that hunger is an issue in Georgia. 

Likely.  The Economic Development and Poverty Reduction Program of Georgia envisages economic performance that would allow Georgia to meet the MDG. 

Goal 2: Achieve universal primary education.

Target 3: Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling.

Enrollment rates in basic education (grades 1-9) are close to 100 percent.

Likely.

Goal 3: Promote gender equality and empower women.

Target 4: Eliminate gender disparity in primary and secondary education, preferably by 2005 and in all levels of education no later than 2015.

Surveys show no significant gender differences in access to primary and secondary education. 

Likely.

Goal 4: Reduce child mortality.

Target 5: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate.

According to the Human Development Report 2003, the under-five morality rate in Georgia in 2001 was 29 per 1,000 live births.  This was better that the average for ECA (36/1,000); and much better than the average for medium human development group of countries – 61 per 1,000 live births.

Due to current efforts and actions planned under the EDPRP to keep immunization rates at high level, improve breast-feeding rates, provide appropriate case management and home and in community for acute respiratory infection, pneumonia and diarrhea and improve access to appropriate health care, reliable water and improved sanitation, it is  estimated that Georgia will make a significant progress in reducing the U5MR.  However, the MDG target (U5MR of 9.7 per 1,000 live births, which is close to the current U5MR level in developed countries)  is estimated as unlikely to be met, given Georgia’s very low public spending on health.

Goal 5: Improve maternal health.

Target 6: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio. 

Available data suggests the MMR doubled over the last 10 years to almost 59 per 100,000 live births in 2001.  Only 59 percent of women complete the mandatory 4 antenatal visits but 96% of births are attended by skilled health personnel

Planned actions aimed at improving antenatal care are expected to result in decreased maternal mortality.  However, given high maternal mortality rate and its recent increase, the MDG target (15 per 100,000 live births) is estimated as unlikely to be met.