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UNCLAS SECTION 01 OF 02 BISHKEK 000094 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SCA/CEN 
 
E.O. 12958: N/A 
TAGS: ECON EAID SOCI EAGR KG
SUBJECT: POVERTY IN KYRGYZSTAN A MIXED PICTURE 
 
REF: BISHKEK 007 
 
¶1. (SBU) Summary: High poverty rates remain a problem in 
Kyrgyzstan, especially in rural areas.  In 2008 about a third 
of the population was under the official poverty line.  The 
poverty rate fell significantly over the past few years, due 
in large part to growing remittances from Kyrgyz workers 
abroad. In 2009, however, the amount of remittances fell by 
approximately 20 percent due to the global economic crisis. 
For the poorest Kyrgyz, food affordability remains a concern. 
 A good harvest last year improved the food situation, but a 
portion of the population remains vulnerable to  economic 
shocks or poor harvests.  End summary. 
 
Poverty Rate High, But Falling 
------------------------------ 
 
¶2. (U) The number of people in Kyrgyzstan living under the 
poverty line has fallen significantly over the past few 
years.  According to Kyrgyz Government statistics, the total 
percentage of the population under the poverty line fell from 
63 percent in 2000 to 32 percent in 2008.  The rate of 
extreme poverty fell from 33 percent of the population in 
2000 to six percent in 2008.  The poverty line is calculated 
as the minimal amount of money needed to meet basic 
consumption needs, while the extreme poverty line is defined 
as the amount of money needed to meet basic food needs. 
 
¶3. (U) The decrease in poverty was widespread, with all 
regions of the country experiencing a decrease in both 
poverty and extreme poverty between 2000 and 2008.  Poverty 
also decreased at a relatively equal rate in both rural and 
urban areas.  The poverty rate has been consistently higher 
in rural areas compared to urban areas.  In 2008, the poverty 
rate in rural areas was 37 percent versus 23 percent in urban 
areas. 
 
¶4. (U) A World Bank analysis of poverty data through 2007 
concluded that the direct and indirect impact of increased 
remittances was the primary cause of reduced poverty rates 
since 2000.  Remittances from Kyrgyz working abroad, 
primarily in Russia and Kazakhstan increased dramatically; 
from about $150 million in 2003 to  $1.1 billion in 2008. 
The actual figure is probably even higher, since these 
statistics likely miss some remittances that flow through 
informal channels.  Those who received remittances spent most 
of their additional money on personal consumption and 
construction, increasing the incomes of those working in the 
service and construction sectors. 
 
Lower Remittances - How Much Of A Hit? 
-------------------------------------- 
 
¶5. (SBU)  The world economic crisis, and falling remittances 
to families in Kyrgyzstan, has impacted Kyrgyzstan's poverty 
rate.  According to the Kyrgyz Ministry of Labor, Employment 
and Migration, remittances fell by about $220 million in 2009 
compared to 2008, to $980 million.  While there is no poverty 
data available yet for 2009, some data indicates that 
households have felt the economic impact and cut their 
discretionary spending.  During the first ten months of 2009 
imports fell by 26 percent compared to 2008.  Anecdotal 
information from conversations with businesses also indicate 
that sales of consumer goods fell significantly in 2009. 
 
Food Affordability - Better But Still A Concern 
--------------------------------------------- -- 
 
¶6. (U) The decline in poverty rates from 2000 to 2008 also 
led to an improvement in the caloric intake of the 
population.  The percent of the population consuming less 
than 2,100 calories per day fell from 61 percent in 2000 to 
49 percent in 2007.  A closer look at the latest available 
nutritional data from the first nine months of 2008 shows 
that all but a small portion of the population consumed close 
 
BISHKEK 00000094  002 OF 002 
 
 
to 2,100 calories/day.  Although caloric consumption appears 
to be relatively high for most, malnutrition is still a 
concern.  Only the wealthiest 20 percent of the population 
consumed the recommended amount of protein and fat.  This 
leads to seeming contradictions in nutritional outcomes.  For 
example, according to a 2008 World Food Program study, the 
percentage of children under 5 years old who are underweight 
was only 2.4 percent, while 30 percent of children under 5 
suffered from stunted growth. 
 
¶7. (SBU) As in many countries at the time, food prices in 
Kyrgyzstan rose steeply in 2007-2008 due to the world-wide 
increase in food prices and a poor harvest in 2007.  The 
World Food Program estimated in 2008 that 34 of the 
population was at risk of not being able to afford food, a 
figure that closely matched the 32 percent of the population 
living under the poverty rate.  In 2009, a good harvest 
lowered the prices for many food products and appears to have 
lessened the immediate risk of food insecurity.  However, 
many Kyrgyz households remain vulnerable in the event of 
future economic shocks or poor harvests. 
 
Government Boosts Aid, Hikes Energy Costs 
------------------------------------------ 
 
¶8. (U)  The Government of Kyrgyzstan provides direct 
assistance to the poorest households.  In 2009, the Kyrgyz 
Government provided social benefits to 422,000 residents, out 
of a total population of about five million.  The majority of 
recipients, 362,000, received a welfare payment due to their 
low income, while the remaining recipients had a special 
need, such as disability.  While the average payments are 
low, only about five dollars a month, they are an important 
income supplement for the poorest Kyrgyz. 
 
¶9. (SBU) The Government's decision to double electricity 
prices starting January 1 of this year (reftel) will be 
especially difficult for the poorest households who already 
spend a large portion of their income on food and energy. The 
Government has decided to increase the amount it pays in 
social benefits to help lessen the impact of the higher 
energy costs.  Still, increased social benefits will have a 
limited impact on the poor's ability to cope with higher 
electricity rates. 
 
Crisis Weathered? 
----------------- 
 
¶10. (SBU) It is likely that Kyrgyzstan's progress on poverty 
reduction stalled in 2009, though definitive data is not yet 
available.  The country appears to have weathered the 
economic shocks of the past couple years, including higher 
food prices, decreasing remittances and slower economic 
growth, without major social implications.  However, poverty 
rates remain high and the  economy vulnerable to external 
shocks. Kyrgyzstan's ability to advance in 2010 depends in 
part upon the economic recovery of other countries in the 
region, especially Russia and Kazakhstan. 
GFOELLER 

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