Regions and Countries

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p. 3 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Subregional Economic Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Philippines : I. Country Performance Assessment

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B. Poverty Assessment

1. Poverty Issues

7. High incidence of poverty continues to persist in the Philippines and may have increased as a result of the El Niño and financial crisis. In the decade prior to the crisis, poverty had been slowly declining. The Family Income and Expenditure Survey of 1997 showed that poverty incidence declined from 49.3 percent of total population in 1985 to 40.6 percent in 1994 and to 36.8 percent in 1997, the latest year for which such information is available.¹ The impact of the financial crisis was exacerbated by the El Niño phenomenon. Hence, both the urban and rural sectors suffered severe shocks. Rising prices and a weakening labor market resulted in declining real income and an increase in poverty. The combination of continued high population growth rate of 2.2 percent along with negative GDP growth in 1998 led to an increase in the incidence of poverty in 1998 (37.5 percent) as compared to 1997 (36.8 percent). With inadequate recovery from the crisis, no significant downward trend in poverty incidence is likely in 1999. This is confirmed by self-rated poverty surveys conducted at various intervals over 1998 and 1999.²

8. The improvement in poverty incidence prior to the crisis was more of an urban than rural phenomenon. Between 1994 and 1997 urban poverty incidence in the total population declined from 28 percent to 21.5 percent while rural poverty incidence fell only from 53.1 percent to 50.7 percent;³ thus more than half of the rural population is still poverty stricken. While in 1994 there were twice as many poor rural families as poor urban families, in 1997 there were 2.4 times as many. This emphasizes the need for revitalizing rural areas to address rural poverty. The lowest incidence of poverty is in the National Capital Region and surrounding areas; while the highest, exceeding 50 percent, are in the Autonomous Region for Muslim Mindanao, the Central and Northern Regions of Mindanao, and the Bicol Region. The poor tend to be self-employed in agriculture and related activities in rural areas and casual laborers of all types in urban and rural areas. There is a strong link between rural and urban poverty as the urban poor are mainly rural migrants. Nonetheless, urban poverty has its own specific characteristics and needs special interventions. Policies for poverty reduction will therefore require both improved sustainable rural income generation as well as targeted programs in both urban and rural areas. The Government’s Medium Term Philippine Development Plan (MTPDP) 1999-2004, emphasizes poverty reduction through measures such as promoting equitable growth, rural development, and higher social sector investments. In 1998 the Government established the National Anti-Poverty Commission and the Presidential Commission for the Urban Poor. A poverty reduction target envisaging a reduction in the incidence of poor families from 32 percent in 1997 to 25-28 percent by 2004 has been projected in the MTPDP. In support of this, the Government is developing a new poverty eradication strategy through a broad-based consultative approach supported by ADB, the United Nations Development Programme (UNDP), and the World Bank. The strategy should not only view poverty from the income angle, but also consider the broader aspects of human deprivation, development and quality of life.

9. ADB’s country operational strategy (COS, see Section II for details) conforms closely to the Government’s approach on poverty reduction as presented in the MTPDP. With poverty reduction a major focus of the COS, annual CAPs have been designed to specifically address the critical dimensions of poverty.

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