Peru - Poverty assessment and social policies and programs for the poor

Report No. 11191.PE Peru Poverty Assessment and Social Policies and Programs for the Poor May 5, 1993 Human Resources Division Country Department I Latin America and the Caribbean Region FOR OFFICIAL USE ONLY MICROFICHE COPY i Report No.: 11191-PE Type: (SEC) Title: POVERTY ISSUES AND SOCIAL SECT} Author: JONES, T Ext. :35309 Room:I7181 Dept. :LAIHR 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~( P~~~~~~~~~~~~~~~~~~~~ U q. This 40 . ,.has. r.stricted dis.tton afdmay be used.by recip, ---s d y ?c -f Iiek soff .taf duis vt- co, nte,of -oth ewise W'~~~ W * WodBn oi~ati, . W ;~' , , . .. __; .x..- , -- .e~  CURRENCY EQUIVALENTS Currency Unit prior to 1985 Sol SIS.) 1985-1990 Inti (/.) = S/1,000 1991-present New So (S/. = 1/1,000,000 Exchange Rates US*1.00 equivalent (period average) Official Parallel Market 1986 1113.9 1/17.8 1987 1/16.8 1/40.2 1988 1/128.8 1/314.8 1989 1/2,666.2 114,394.9 1990 1/187,885.6 1/206,441.1 1991 October S/0.92 November S/1.02 December S/1.00 1992 January S/0.99 February S10.97 March S/0.96 From August 1990, the exchange rate was unified.  FOR OFMCIAL UE ONLY ABSTR4CT 1. The objecdve of this report is to identify the components of a povrty alleviation strategy for Peru, with a focus on socia services. The report analyzes Peru's previous economic performac and the main eements of the reform program which could affect the poor. It also analyzes the characteristics of poverty in Peru. It examines the curret stats of the socia sewices most critcal for the poor, identifying key issues and examining the utilization of services. Ibe repoit makes recommendations on priority programs. Fmally, it looks at issues in the implementation of a poverty alleviation strategy, and it examines the Government's progress thus far in defining its strategy. 2. Peru's potenti was frUste during the decades of heavy Government intervention In economic acdvity. One of the legacies of poor economic pefmae is the persisnc of high poverty levels. In August 1990, a new adminis on announced the first measu in a strong stabilization aa adjusatent progrm. The initation of major economic reforms provides a unique opportuity for Peru to consider a program to alleviate poverty. These economic reforms are laying the groundwork for broad4baed economic growth, a reduced role for the state and greater opportunities for the poor. A targeted povety alleviation program including social services can proect the most vulnerable groups and assist others to take advatage of new opporites. 3. Low spending and poor outcomes characterz Peru's social sectors. Infnt an mater mortality rates arm among the highest in Latin America. Chfld malnutiton peists at 1971 levels. The 1991 cholera epidemic demonstaed in a dmatic way the prcaiousess of sanitaton conditions. In education, Peru performs well in tms of primary and secondary school enrollment, yet reptiion rat are high and educational quality is low. With sharp declines in Government expendiure over the past five years, public resources for socal services have become scarcer. While protected from the extreme reductions experienced in other sectors, social spdiw is lower than in neigboing ries. 4. Health and education sector issues infuence directy the quality of life for the poor. In health, the benefs of Peru's extensive network of primary care facilities are not realized because of a scarcity of equipment, poor distution of pesnnel and a low proportion of total resoces devoted to primary care. Quality and utilization are low. In nutrition, widespread child malntrition has not been reduced significantly trough food assiace. Numerous agencies wortc on nurition but in the absence of an oveal fiamework, adequate norms or surveillance. In education, prepimary schooling quality is poor. Multigrade schoois in rural areas iack supplies and well-trained teachers. Illiteracy persists at a relatively high rate, with little progress in eradicating it among nrual women. This document his a restricted distribution and may be used by recipients only in the performance of their oflicial dutis. Its contents may o otherwis be disclsed without World Bank authotietion.  5. Who are the poor in Peru and how do they use social services? Ts report constructs a poverty pro9fie drawing upon a 1991 Living Standards Survey. Half of all households surveyed are poor and one fiflh are extremely poor. The poor send their children to school later and a larger proportion either never attend school or drop out very early. Fewer of the poor attend pre-pimary schools. The poor are less likely to receive vaccinations, seek media care or have access to public sewerage systems. They are more likely to use primary health cenrs and posts. 6. This report recommends that education programs for the poor improve conditions in rural multigrade schools, provide textbooks and teaching materials and train teachers. More emphasis needs to be placed on preschool education. Non- Spanish speaking women should be trained In functional skills including literacy. Health programs for the poor should concentrate on providing mothers and children with adeuate primary health care services. Supplies of basic equipment, mateials and medicines need to be ensured for primary care services. Prevention and treatment of cholera and improvement of hospital emergency services are other high priorities. Well-designed social compensation programs can complement improved socil services. Employment programs can reduce poverty by providing income and, creating and rehabilitating infrastructure. Food assistance can protect the nuritional status of vulnerable groups. 7. Implementation of a poverty alleviation strategy needs to build in approprlite' targeting and institutional arrangements. In Peru, geography is the single best indicator for reaching the extremely poor. By direcdng resources to thb rum sierra, one in every two extremely poor households can be reached. The magnitude and seriousness of poverty in Peru call for exploring a vaiety of insdtitonal arrangements. Among those worth considering is the social investment fund model. Peru established FONCODES, its National Fund for Social Compesation and Development in August 1991, and by mid-1992, this organizat bega to show encouraging signs of its potential. NMOs should also be called upon to participate actively. They can mobilize and utilize substant levels of resources to reach underserved populations effectively. 8. Ihe Government recendy prepared a poverty alleviation strategy which is generally consistent with the findings and recommendations of this report. The Government strategy recognizes that poverty alleviation demands essentily an economic strategy. It aims to improve the living conditions of the extremely poor through programs in food assistance, health, education and employment generation. Financing for this strategy must come from government and donor resources. To attract sufficient donor resources, the Government must demonstrate its own commitment. In 1990, total government spending on health and education reached only 2.2 percent of GDP. As its revenues increase, it is recommended that the Government increase the resources it allocates to health and education. The challenge and test of the Government's resolve in redre log poverty will be the extent to which current and future policies and programs follow its poverty lleviation..  Contents vii latroduetle ix Summand Cya (English and Spanish) xi aopWt 1: From Emosic ad Soa Crus to Rm 1 cotrodm1on Economi Stanion Economic Cdisis 3 Soca Crids S The Econoic lteform Program 9 Initia Response of the Economy and Expected Benes 12 ConclusIon 12 Chapter 2: Pow"erty b NeI13 Trnds in Povety 1970-1990 13 Povefty rfle 14 Smmary 24 Imicaions for Poverty Aleviaon Stratey 25 ahapter 3: Soca Srvks 27 27 Status of Services 27 ham 28 Wealth mad Nourh 30 Health Condo 30 Status of Sevces 31 Issues ~~~~~~~~~~~~31  NutritIon 32 Child Nutritional Status 32 Micronutrients 33 Nutritional Services 34 Issues 34 Conlusfions 36 Chapter 4: Towards a Poverty AlleviatIon StrateW 37 IJtroductlon 37 Socia Services 37 Education 37 Health 39 Nutrition 41 Socal Compensaion Programs 42 Food Assistance 44 Current Status Magnitude, Agencies and Progrms 44 Major Issues in Food Assistance 47 Major Recoramendations 47 Program Speclftc Issues and ReendaIons 49 Concluion 49 ChapterS: ImplementIng a Poverty AlleviatIon Strate 51 Itoduction 51 Targeting 51 Institutional Arrangements 52 Security Constraints 55 Poverty Alleviation Program of Govemment 55 Concluion 56 ibliogaphy 59 Tables Table 1.1 Performance Indicators of the Economy 3 Table 1.2 Indicators of Economic Crisis 4 Table 1.3 Compl ative Social Indicators in Selected Countries 5 Table 1.4 Struchre of Central Government Spending, 1970-1990 6 Table 1.5 Social Setor Spending, 1970-1990 8 Table 1.6 Coefficients of Vulnerability, 1985-1990 9 Table 1.7 Government Spending on Education and Health 9 Table 2.1 Latin America: Poverty Estimates Around 1970, 1980 and 1986 14 Table 2.2 Distribution of Total Expenditure by Decile: All Sample Areas 15 Table 2.3 1991 Poverty Headcount 16 Table 2.4 Regional Distribution of Population by Poverty Groups 17 Table 2.5 Household Size and Per Capita Consumption by Poverty Group 17 Table 2.6 Sex of Household Head Among the Poor 18 Table 2.7 Distnrbution of the Poor by Langage of Interview 18 Table 2.8 Distnrbution of the Poor by Employer of Head of Household 19 Table 2.9 Food Expenditures by Poverty Group 20 Table 2.10 Food Consumption of Poor Households by Type of Acquisition 20 in Rural Sierra iv  Table 2.11 Non-Food Expenditure Pattem by Poverty Group 21 Table 2.12 Public Services for the Poor 22 Table 2.13 Education Level of Household Head 23 Table 2.14 Agricultura Land Owwnship in the Rura Sierra 23 Table 2.15 Crops Grown in the Rua Sia 24 Table 3.1 Wage and Budget Indies 28 Table 3.2 Indicators of Intemal Eficiency of Primary Education 29 Table 3.3 Infant Mortality Rate by Region 1989 30 Table 3.4 Coverage of the Maternal-Child Prom 1989 31 Table 3.5 Intensity of Contacts in the Maternal-Child Progam 1989 31 Table 3.6 Nurses per Doctor 32 Table 3.7 Disea Trends 33 Table 3.8 Changes in Household Foodshare by Region ard Expenditure Levels 34 Table 3.9 Food Consumption ss Percentage of Total Consumption for Lima Households 34 Table 4.1 School Attendance by Age Group and Poverty Level 38 Table 4.2 Kinderaten Attendance by Poverty Group 38 Table 43 Percentage of Children Receiving All Required Vaccinaons 39 Table 4.4 Percentage of Ill Who seek Medical Attention 39 Table 4.5 Drug Purchases by Poverty Level 41 Table 4.6 Unemployed by Poverty Groups 43 Table 4.7 Major Food Assistce Programs, 1991 45 Anexes Annex A Social Security and the Provision of Health Services The Private Provision of Social Semvices Annex B Recent Research on Povety in Peru Annex C Calculation of Poverty Lines Table 1: Poverty Lines for reme Poor and Poor by Region Table 2. Poverty Lnes Relative to Expenditure Distibution and Mlean by Region Table 3: Basic Food Basket for Lima and the Coast of the National Institute for Food and Nutrtion (INAN) Table 4: Basic Food Basket for the Sierra Annex D living Standards Measurement Survey, 1991 (Selected Tables) SlatsicalAppendix v  PREFACE This report is based on the ndings of missions which visited Peru in June and September 1991. The missions consisted of The-esa P. Jones (Chief of mission), Eduardo Atalab, Karen Cavanaugh, Ernesto Cuadra, Magaret Grosh, Bruce Herrick and Richard Moore. 'Me section on non-govermenal organizations draws upon a backmund paper by Tbn de Witt based on findings of an April 1991 mission led by Christopher Hennin. 'he section on the poverty profile draws on a background paper written by Gustavo Yamada and a recent Living Standards Measurement Survey conducted and processed by the firm Cuanto. The vnissions would have been unable to prepare the report without the assmance provided by staff of the Ministry of Economy and Finance, the Ministy of Health, the Ministry of Education, the Cetr Reserve Bank, the National Planning Institute, FONCODES and other agencies in Peru. Tbis report benefitted from the Government's review of an earlier version, which was discussed with representatives of the Ministries of EReazh, Education, Economy and Finance, and the Central Reserve Bank in October 1992. Tlese discussions confirmed the Government's agreement with the report's ov. -all conclusions and recommendations. Tbis version has been revised to take into account the Government's recent formulation of its poverty alleviaton strategy. The rport also benefitted from an exceptionally helpful group of peer reviewers within the World Bank, comprised of Paul Glewwe, Margaret Crosh, Phil Musgrove, Larry Wolff and Helen Saxenian  Acronyms and Abbreviatons M^CA 6 Id _RwalCanA EO_na FOdASbd fLC APRCL Fomodn4oafUpta4Apcaofin PA DAIZOD DeaurofodslaAgdcukaydeIahfaeshuc- Ag ancRliun and Reo tumftslmdeaZomDepbniu Developwens in DmudAm=as DESCO Centro doe ad6ol y_Picido1Duszolo Cunx forth Stuidy and Ptomtio of Devem wsPM Famb de Bme Social 3o" Emwv7 social Fund (Bo"ivia) PONCODES Famdo NaionadeC_sp yDeamyDnOo NaiuSoci and De"dePmmkd INAN T Natond Nac AlonaldioyNut Ntlnsftu onFeEJigandNutMotb MCIN maternal adMddtldeakh MOE bsodeBdwaci h fEducaam NGO __ OPASA Obia F yAuthciaSocial AvstDvyelqpmwandRaiAgecy vil  PRONAA nNAIwddAyo_ NaPoodAs_P PAD Prmg dOAiseDn ef DheIaD4xePa PAHO Pan Am4hb H _ zo PANFAR p oy Nukle Iea IcFamiNa Fading ProgmfbrH4ghRisk Famls enAltoRao PAT-PAMg cotoWoS G sPUmy School 0ildm and TB} PLSS Fem Livivg Stadars Survy PRW;MA PmacosenhftadcSalud,aM y PwjeclnsImunionaSgs PRODA PtoVm dde Darrolo Ingal lJtbo cm Food Aad I ontad Urban MON"d Natonl Food Support Progrn PRONABCE Progam Naconal de Contrl del docby Naionl C3okw and danicism CkdisnoRadmibos aaaSPtmg PRONOEE qdm No Esh de Bdlca ni NlEProgrmm SISVAN S_ste deVIlmolA y N Iuiol Food and Nutitim Surveilace Syslem alDE Uided DepSnaldeSad I k 'I nit WFP Wodd Food Program V]il  Introduction 1. In August 1990, in the midst of plummet- advantage of oppaortnes, not only the few able iug output and hypnla on, a new adiniz't- to gamer ecomic rents. Second, the new admin- tion in Peru announced te first measures in a istaion has decided to reduce the role of the Gov- strog stabilization and adjustment program. The ement in economic activity. As the state pulls main tenets of the pgam are tight fiscal and back from many eoomic activities, it will free moneary policy, libalzation of makets and a resources to improve the prwision of public ser- reductin of the previous pervsive role of the vices such as education and health Govemments overnment in the economy. Mhe objectives are to traditionally have an important role in providing restore croeconomic stability on order to pro- these services to the disadvantaged. Third, the mote sustainabe, broad-based growth, thereby re- pmotion of growth would beneit the poor, but it versing Peru's legacyof economic stagnation and will take sone time for the ecomy to respond to deterioation.That legacy is reflected in many eco- the new incertive structe. Also, although sore nomic and social indicato, but pehaps most im- reforms are likely to help the poor, others may lad portaty, in the prsistee of a higb incidence of to tempory losses for some. In addition, certain poverty In cerai regions and ethnic ps, and a groups in the country - those lacking sufficient decras in welfare to below the poverty line for educato and those with poor health, for example may who had not previously been poor. - may not be able to take advantage of emloyment opportu-ni without special assisUce. Ihe needs 2. The initiation and, thus far, impressve of thesegroups should be addressed. implementaion and broadeing of the reforms pwvide a unique opportuniy for the Govement 3. The purpose of this report is to identify the and the agencies providing financial support to components of a poverty alleviadon strategy for Peru to consider the needs of the poor. It is a Pe, focusing on social sevices. Of course, a pro- unque opportunity for three reaso. Fira, inttt- gram to reduce poverty would encompass other national expedence shows that the first prong of an aspects as well such as rural developmen and in- effective stategy to reduce national pet Is the fsuctiemprovemens. However, those areas promotion of broad-based growth, partculaly are not the focus of this document The report be- economic expansion dhat encourages the use of la- gins with a brief analysis of Per's previous eco- bor. For many years the requisie polcies and nomic performance and the main elements of the incentive strucue for growth have been absent reform program, especially those aspects which in Peru. That appears to be changing and qukidy. could have the biggest impact on the poor. The If this program is succesfl in achieving its second chapter analyzes the chaact cs of goals, alare groupf people will be able to take povery m Peru. mhe third chapter exmines the ix  curt statu of thsocial sCevi most critidl cpter looks atpissues sh as the for the poc. J te fourth chapter tohe i ldc- t oleof socia ivestment funds and non-govern- floin die dXoion ~of socia vis plus lfor- me Sal ios. a o nes X p mlon on thOe use of ths servces by the poor, are made by the Oovermet In defi a povet al- used as the basis fow recammeng the priority leviaton stategy and in iX dfying proets to programs which need to be supportd by both the spport tiht satg. Govenment an exti asistnce. Th fia '  Summary and Conclusions 1. One of the legacies of poor economic per- groups and assisting others to take advantage of formance in Peru is the peistence of high poverty neww oppouties is calfed for and is the focs of this levels in some regions and ethnc groups and the repot decline in living andards of others. Tho initiation of major economic reforms provides a unique op- 2. The promising potential of Peru was fes- porunity for both the Government and those pro- trated durng three decades of heavy Government v tag financial support to Peru to consider a pro intevention in economic activity which rested in gmm to alleviate poverty for several reasons. Fist, a legal structure and policy environment inimical international experience shows that a meaningful to growth. The overexpansion of the state led to a and sustained reduction of poverty is impossible waste of resources and economic stagnation. Be- without broad-based economic growth. Up until cause of the lack of growth and rigid, closed mar- now the macroeconomic stability, administrative kets, few groups in the country had access to the framework and incentive structure conducive to means to improve their livelihoods. Public policies growth were absent in Peru. That is changing and diorted most of the markets in the economy. quicldy. Second, one reason for the poor growth Trde policy relied on an import-substitution stat- was the over-exteion of the slate in economic ac- ey with very high tariffs and many non-tariff bar- tivity. A key element of the reforms is the reduc- rers. Declining tax recipts contibuted to the de- tion of the role of the state. As the public sector terioration of fiscal performance and reduced the moves out of mm where it adversely affected out- resources available for operating, maitaining and comes - labor and financial markets and produc- investing ine al public seices. Even policies tion - it will free resources for areas where it can and progrms established to benefit workers and and should make a positive contribution, namely famners, such as labor stability laws and agrarian the provision of public services such as education refonn, proved to be detrimental to those groups and health. Third, in the medium and long-run the and to the economy. Real wages fell afer 1970 and implementation of the reforms should reduce pov- employment in the fomal sector hrank. Agricul- erty by providing more opportunity for the poor to tore grew at only half the rate of population provid- use their assets, such as labor and land. However, ins little opportunity for an improvement in rurl in the short-run some measures may lead to tempo- incomes. rary difficulties. It will also take time for the economy to respond to liberalization and some 3. President Garcia's explanation of cbronic groups are not able to participate fully. A targeted inflation and low growth was that Pem was in a poverty alleviation progm, including social ser- "debt trap":servicing the external debt would ac- vices, and aimed at protecting the most vulnerable celetaft' devaluation and inflation, erode domestic xi  savings, and curtail investment. Consequently, his Government's ability to provide basic services in administration (1985-90) put a ceiling on foreign the long-run. Growth in urban employment and debt service of 10 percent of the value of exports, wages is a major determinant of the pace of pov- and later stopped payments altogether. It instituted erty reduction both through its direct influence on widespread foreign exchange controls and in- the exng wban poor and through the opportuni- creased protection. The Government also raised ties it creates for migration from rural areas. the minimum wage, expanded credit and subsidies, Greater neutrality in the trade regime can support a decreased the value added tax rate and lowered more labor-intensive pattern of industrial expan- public sector prices. This strategy led to a high fis- sion in import-competing as well as exporting sec- cal deficit, financed by money creation. After 1987 tors. The Government has moved quickly and the market lost confidence, inflation rebounded boldly to liberalize the trade regime. However, and economic output and real wages declined trade reform is most effective if factors of produc- sharply. Economic mism ment reached a cli- tion are free to respond to market forces. In the max in 1989-90 and was reflected in hyperinfation. case of Peru, state policies since the 1960's have severely restricted factor movements. In order to 4. The poor economic record is one factor promote more opportunities for urban employ- behind the poor health conditions in Peru. Among ment, a key area for reform is labor market deregu- countries in the region, Peru ranks near the bottom lation. Policies to promote rual development also on health indicators. The 1991 cholera epidemic are an important component of the poverty allevia- demonstrated in a dramatic way the precariousness tion strategy. of sanitary conditions nationwide. In education, however, it ranks near the top on the ratio of stu- 6. Growth is important, but is not the sole dents enrolled in primary and secondary schools component of the poverty alleviation strategy. Pro- although high repetition rates and low quality are grams are needed to ensure that the poor can take issues. The public resources available for social advantage of job opportunities and to protect some services have become scarcer with the sharp de- vulnerable groups that are not able to participate dine in overall Government expenditures during fully in the economy. In order to design these pro- the last five years The decline is explained by sev- grams information on the poor is needed. The pov- cral factors including the severe recession and the erty profile of Peru constructed in this report is near vanishing of the country's tax system. The based on datafroma Uving Standards Survey car- social sectors were protected from the more ex- ded out during October/November 1991. Two treme reductions experienced in other parts of the poverty lines are calculated. Households are classi- Government. Nevertheless, because of the decline fled as extremely poor if their total expenditures in tot resource availabilit, Peru generally spends are less than the cost of a basic food basket. less than its neighbors in ese ar Households are classified as poor if their total ex- penditures are less than the cost of a basic food 5. In August 1990, the Fujimori administra- basket plus an estimate of non-food expenditures. tion launched an orthodox and sweeping stabiliza- About half of the population surveyed fal below tion and structul reform program. During the the higher of the two poverty lines and a fifth fail fir stage, the Government took dramatic steps to- below the lower cutoff. wards stabilizing the economy and rebuilding ties with the international financial community. A sec- 7. Where do the poor live? Among the four ond stage of policy reform began in March 1991 regions sampled (lima, urban coast, and urban and and was based on a series of broadxsed stctural mral sierra), the incidence of poverty is highest in measures. These reforms aimed at promoting com- the rual sierra. Two-thirds of the households there petitiveness and deregulating economic activity. are poor and 47 percent are extremely poor. Only Several reforms are crucial for poverty reduction. 10 percent of the households in Lima are ex- Peru's ability to reverse the sharp decline in tax tremely poor, compared to about 20 percent in revenues lies at the heart of the restoration of fiscal both the urban coast and sierra regions. In each of balance. It is also vital in order to guaratee the these three regions the share of poor households is xli  about half. The rural sierra is estimated to contain 12. Among land-owning houeholds, the the largest number of extremely poor (1.6 mfllion poor have roughly 50 percent less land than the people). Because of its size Lima contains the non-poor. About a third of poor households own highest number of poor (2.5 million people). irrigated land, compared to about half for the non- poor. Poorer households in the rural sierra tend to 8. The typical poor person lives in a larger have more workers engaged in agnculture than is household than the non-poor, on averge contain- the case for better-off households. The most im- ing 1.5 more individuals. Each worker in a poor portant crops produced in the rural sierra by the household supports four family members. For the poor are potatoes, barley and wheat The crops non-poor the number falls to three. Per capita food which are produced mainly by the poor are white expenditures in an extremely poor household are maize, barley, potato, oca and olluco. only 40 percent what it is in other households and the similar ao for total expenditures is 30 pecet 13. The poverty profile provides broad guid- ance on a poverty alleviation strategy for Peru. 9. Only in Lima are female-headed house- Jiaty, targeted programs should focus on the ex- holds found disproportionately among the poor. trem poor which represented a fifth of the popula- Indigenous populations are dad in Peru. tion surveyed. Second, prograns to alleviate pov- Taken together, households headed by Quechua erty among the extremely poor should target the and Aymara speakers account for 40 percent of the rural sierra and the indigenous population. Im- extremely poor and about a quarter of the poor. In provements in access to public services, particu- Lima, migrants are slightly more likely than non- lady for ducation, are needed to reduce extreme migrants to be founJ among the poor. The poor are poverty. These households are at greater risk for found largely among two occupational groupings, poor health because they lack dean water and sam- the self-employed and private sector workes tation facilities. Third, working in agriculture is positively associated with poverty. There may be 10. The food commodities accounting for the potential for agricultural policies to reduce pov- largest share of expenditures among the poor are erty, such as reforms related to land titling, the re- rice, bread, sugar, tubers and meat. The most im- habilitation or construction of small-scale irriga- portant products which are consumed from own tion works, and measures to increase the produc- production are tubers, followed by meat and veg- tivity of the crops most important to the poor. etables. The most impont non-food expenditures Other poverty reduction meaes are unrelated to are detergents, public transporation, soap and agriculture. For example, these households would clothing. Although the poor stand to benefit from benefit from opportunities for non-farm work. any price decreases in these commodites and ser- Fourth, the poor (as opposed to the extremely vices rewting from deregulation and trade liberal- poor) have relatively good access to public ser- ization, there is no product or service for which a vices. These households are poor because they are subsidy would be well targeted toward the poor. either in low-paying, low-productivity jobs in the private or informal sector or unemployed. They 11. Slightly over half of extremely poor need more productive jobs to raise their expendi- households have access to a public water systoem, tures above the poverty level and they are rela- compared to 80 percent for the total sample. The tively well-equipped to take advantage of employ- extremely poor who have access to a public water men opportunities. The execution of the economic system have been more affected by cutbacks in reform program and liberalization of the labor supply than others. Fewer than 30 percent of the market are what is most important to reduce extr.'nely poor have public sewerage semrice, poverty for this group. PfMh, the poor would ben- compared to slightly over 60 percent for the total efit from declines in the price of wheat, rice and sample. Education levels are strongly related to sugar. They would also gain from the elimination poverty. Heads of households with less than com- of the ban on second-hand clothing imports and plete secondary schooling are more likely to be lower prices for detergent and soap. Finally, the found among the poor. Government should reconsider its surcharge zili  scheme on agricultmal products. With the excep- the intensity and quality of services is inadequate. tion of dairy products, the scheme either hurts the The composition of professional skills is not opti- por (sugar, nce, wheat products) or benefits bet- mal, mainly because the ratio of nurses/doctor and ter-off farmers (yellow maze and sorghum) nurses/population is too low. There is also worri- some evidence of low utilization of primary health 14. Socal services can play an impotant dual care services. This low utilization is likely to be role in alleviating poverty. First, improvements in due largely to the lack of effective supply. Part of health, nutrition, and education diecty address the the explanation may be user perceptions of limited worst consequences of being poor. Second, there is value because of poorly traied staff and lack of ample evidence that investing in human capital, equipment, supplies, etc. in health facilities. especially in education, attacks some of the most important causes of poverty. The progmms which 17. In nutrition, Peru suffers from relatively have the greatest impact on the poor are primary higb rates of malnourished children and low-birth education and basic health care. weight babies. Food security generally has de- clined for the poorest. The significant increases in 15. In education, there has been an imptes- the incidence of acute diarrheal disease and acute sive expansion in priy enrollments in Peru. respiratory illnesses also suggests greawe precari- However this was coupled with a decline in expen- ousness in living conditions, decreased effective- ditureslstudent and an exodus of trained teachers ness of preventive health measues and the incmeas- from the system. Interal efficiency is low. Repeti- ingly vulnerable nutritional status of the popula- tion rates are high, particularly in the early grades. tion. Micronutrient deficiencies are common in Students spend an average of 13 years in each some areas of the country. A national survey in grade so that by grade 6 almost three-quarters are 1986/87 esfimated that goiter is endemic in 88 per- overage. On average, for each graduate the system cent of communities in the sierra and selva. Small- spends resources equivalent to 8.4 years of school- scale studies indicate that anemia is a public heath ig, 40 percent more than what would be necessary care problem among pregnant and lactating in the absence of repetition and prematre leaving. women and children. Ihe response to malnutrition One problem is the poor quality of pre-primary has excessively relied on food assistance and given education. In addition, there are wide disparities in insufficient attention to complementary health educational attainment and efficiency within the measres, micronutrient supplemenion, and the country. The lack of supplies and poor teaching promotion of better health and nurition practices, practices are a patcular problem in multigrade including breast-feeding, and child growth and de- schools in rural areas. Aother concern is the per- velopment monitoring. The Child Growth and De- sistence of a relatively high rate of illiteracy as velopment Program of the Ministy of Health has little progress has been made in eradicating it in comprehensive and well-founded objectives, but rur areas and among women. As a consequence, not the budget or activities to achieve them. Other the number of illiterates increased by 1.5 percent problems are poor coordination among the between 1980 and 1986. plethora of agencies active in nutrition, a lack of an overall framework for nutrition interventions, the 16. In health, in spite of an expansion in pri- absence of norms and guidelines and weak nutri- mary care infrstrue, Peru has some of the tion surveillance. worst indicators on the continent, particularly in rural areas. The infant and maternal mortality rates 18. How do the poor make use of social ser- are among the highest in Latin America, particu- vices in Peru? Poverty influences school atten- laMy for the poor. Many health problems could be dance in two ways. First children of poor families improved with more concered efforts in primary begin attending school at a later age than children health care. The full benefits of the network of pri- of non-poor families; second, a larger proportion mary care facilities are not being realized because of children of poorest families never attend school of a scarcity of equipment, poor distribution of or drop out very early. One of the factors behind personnel and a low portion of expenditures spent the relatively high repetition rates for children on the progm. There are gaps in coverage and from poorer households is lower attendance at xlv  kindergarten. Altendance rates for female students to purchase drugs, particularly in the sierra. The are lower than for male students among the ex- lack of access to a public sewerage system is tremely poor and among all households in the rual dearly related to problems of diarrhea among chil- sierra dren. While only 17 percent of households lack sewerage facilities, they account for 35 percent of 19. In a program to alleviate poverty the first child diarrea casesm priority for education is to increase the interal ef- ficiency of schools in poor areas. Impwving condi- 21. Programs for the poor should concentrate tions in rural multigrade schools would particu- on providing mothers and youW chidren with ad- larly benefit the poor. Second, a progam to pro- equate primay health care. It is important to im- vide textbooks and teaching materials and to train prove the supply of basic equipment, materials and teachers can improve the quality of teaching in medicines necessary for carrying out these activi- other types of schools in poor areas, increase stu- ties, particllarly in poor areas. Cbolera prevention dent time dedicated to school work and provide and treatment is a second priority and the thd pri- them with more relevant learning experiences. ority would be to strengthen hospital emergency Third, more emphasis needs to be placed on pre- service. school education. Steps need to be taken to im- prove the preparation of children for school in the 22. Even with improved social services, in the PRONOEI and Government-run kindergartens and short-run some groups may remain vulnerable be- to promote greater awareness of the value of kin- cause they are already living on the edge - for ex- dergarten among the poor. One way to atract ample, households lacking employed workers or poorer students would be to offer school feeding whose heads can only find low-productivity jobs programs at this level in some localities. Fourth a in household services or agriculture. For these program to teach non-Spaish speaking women people well-designed social compensation pro- functional skills including literacy should be part grams could complement the two main elements in of poverty alleviation effors Progams to reduce the poverty alleviation strategy - promotion of illiteracy in this group must consider that they are broad-based growth and improved and more equi- widely dispersed and thus hard to reach and that tably distributed social services. their free time is minimal. Experience from other countries suggests using NGOs. Tey have the ca- 23. Employment progams can reduce poverty pacity to reach deprived areas and to incorporate by providing employment (and thus inwme) to literacy programs into ongoing activities, thereby those in need and can generate additional benefits reducing costs. through the rebabilitation and creation of infra- stutre. Since poor people are wflling to work for 20. In health, the coverage of vaccinations a relatively low wage these programs can be cost- among children is low, particulary among the effective. The impact of an employment program poor and in the rural sierra. In general, about half on poverty will be greater if unemployed-headed of all ill people seek medical care. Among the ex- households are found to agreater extent among the tremely poor, this drops to about one in three. The poor than among other groups and if the project gap between the poor and the nonpoor is paticu- improves infrarctu or facilities used by the laMy large in the sierm Where are the poor likely poor. In Peru, about two-tbirds of the households to go for care when they are i and whom are they headed by uwmployed are poor and 30 percent are likely to consult? The poor are more likely than the extremely poor. However, households headed by non-poor to use health centers and poss, as well as an unemployed person represent a small number of pharmacies. Nevertheless, the highest proporkion the poor, generally 3-4 percent In the urban coast of the poor (30 percent) use hospitals. The poor are and sierra the proportion of the extremely poor is more likely to consult paramedics, pharmacists somewhat higher - 6-8 percent. It is important that and traditional healers than the rest of the popula- these programs be cost-effective. The persons em- tion. But across all expenditure levels the main ployed by a temporary employment program source of medical consultations are health profes- should be poor. This can most easily be accom- sionals. Extremely poor households are less likely plished if the wage rate is set sufficiently low that xv  that persons with higher paying (and higher pro- derstanding of the nutrient gaps of participants. ductivity) alternatives are not tempted to leave Food assistance coverage among patients with them. The wage rate ensures that an automatic chronic diseases, especially tuberculosis, is inad- self-selection will occur. The average wage rate equate and needs to be increased. The coverage of recommended for any emergency employment the school feeding program should be concentrated progam in Peru is the legal minimum rate. An- on a smaller number of children and assistance other design feature that would promote cost-ef- should be increased to levels which will have a fectiveness would be the locally demand-driven positive impact on absenteeism and desertion. selection and administation of projects. 26. Two issues which arise in the implements- 24. Poor households spend an average of two- tion of the poverty alleviation strategy are target- thirds of their expenditures on food, and those in ing and institutional arangements. Targeting seeks the rural sierra spend three-fourths on food. Thus to distribute transfers or other benefits only to protecting the food security of the poor is a useful those identified as the beneficiary group in the in- way of protecting living standards. Food assistance terest of efficiency. The administrative mechanism can also protect the nutritional status of vulnerable must not cost so much to operate that it effectively groups such as pregnant and lactating women, absorbs the savings from excluding the non-needy. young children and the sick and the elderly. Food In Peru, geography is the indicator with the greatst assistance is a significant resource for the social value as a targeting mechanism. By directing re- sectors. In 1991 donor food assistance resources sources to the rral siea, one in every two extremely totaled at least $150 million. Food assistance poor households in the country can be reached. programs provided over 226,000 metric tons of food to at least 9 million beneficiaries. Food assis- 27. Some characteristics closely associated tance to the urban poor is widespread and substan- with poverty suggest the types of assistance which tial in Lima. Transfers in cash and goods (includ- would mainly benefit the poor. Nearly all house- ing food assistance) from non-profit organizations holds which draw their water from wells are poor. represent on average one fourth of total expendi- Other housing characteristics closely associated tures in extremely poor households and almost ten with poverty include the use of latrines and the ab- percent of expenditures for poor households in sence of household lighting or sanitation facilities. Lima. However, in other areas these transfers aount for a negligible percentage of household 28. Peru seems to be an appropriate environ- expenditures of the poor. The fact that food ment for a social investment fund. Experience with assistance does not reach the rural poor suggests social funds in other countries indicates that effec- that other mechanisms should be explored, such as tiveness depends primarily on the capacity to se- food coupons. Food assistance appears to be lect the right projects, which in turn depends on the relatively well targeted to the poor in Iima; among quality of staff and their independence from politi- the non-poor only 6.5 percent benefit, compared to cal pressures. In August 1991 the Peruvian Gov- three-quarters of the extremely poor households ernment established a social investment fund, the and nearly 40 percent of the poor. Outside Lima, National Fund for Social Compensation and however, more than 40 percent of food assistance Development (FONCODES). Progress in making beneficiaries are from the non-poor. FONCODES operational was slow and initially the 25. The most nutritionally vulnerable groups confusion overwhether the agency was going tobea are pregnant and lactating women and pre-school "demand-driven" or a "top-downe operation ad- aged children, particularly those under the age of veisely affected the quality of some projects. How- 2. The coverage of direct food assistance to moth- ever, in mid-1992 performance began to improve. ers and children appears adequate, but the low lev- els of assistance provided to most beneficiaries and 29. The Regional Compensation Fund which the absence of complementary nutrition promotion is operated within the Peruvian budget has the po- and health care activities makes it unlikely that tential to contnbute to a poverty alleviation strat- they have a significant impact on nutritional status. egy. However, currently no attempt is made to di- Also, beneficiary rations are not based on an un- rect more resources to poorer areas. A change in xvi  the allocation fomala would only be feasible and 33. There are two sources of financing for the meaning with higher tax revenues and fic poverty alleviation stategy, govemnment and do- stabilization. nos In order to attract sufficient donor resources the Government must demonstate clearly its owt 30. The magnitude and seriousness of the commitment to poverty alleviation. In 1990 it is povety in Peru call for the active participation of estimated that total govemment spending onhealth all esources, including Non-Governmetl Orga- and education reached only 2.2 percent of GDP in nizations (NGOs) They have several strengths. Peru. As tax reform and the measures to strengthen They can mobilize and utilize substantial levels of tax administration improve revenue generation, it resoures They are also able to reach undererved is rcommended that the Government endeavor to populations effectively. NMOs are a strong con- increase the resources allocated to health and edu- stituency for the promotion of poverty alleviation cation. Spending on education and health of about goals and progm here are many NGQs in Peru 4 percent of GDP is the average for Latin America coveing diffient fields and eas of the counry. and about the level that was spent in Peru during the first half of the 1970s. 31. NGOs also bave some weaknesses. They are often vulnerable to donor influence and have 34. The Government of Peru has taken an im- difficulty formulating policy proposas. Collabora- portant step to reduce poverty. Over the medium to tion with the Govemment is constrained by real long-run what is needed to alleviate the high levels and perceived barries The dispersion of Govern- of poverty is broad-based growth That is the ob- ment responsibilities over a broad range of state jective of the stabilization and adjustment pro- gencies makes NGO eny difficult. Also NGOs grm. However, this is not enough to alleviate differ as to their mangement and adnistrative poverty, particulary in the short-rtn Measures are capacities. Some Government agencies view needed to protect vulnerable groups and to ensure NOOs as competitos instead of potenial execut- that the poor are able to take advantage of the ing agencies. Mistrst hinders collaboration. The greater opportunities in the reformed economy. In Giovernment should establish clear and efficient order to address these latter needs, this report has mechamn for NO cMollaoatio mng NGO examined the profile of the poor in Peru and rec- consorta provide one mechanism which should be ommended priority policies and progms targeted explored for fostering greater coordination, dia- to them. The Oovernment has made a start in this logue and joint plannin with the Government. area. Its poverty alleviation strategy sets clear and aoprit priorities and goals for poverty reduc- 32. The Government ecently prepared a pov- tion efforts within a fiamework of a continuation erty alleviation strategy. The purpose of the docu- of economic policies that would maintain macro- ment is to set the pricrities fora poveny alleviation ecnomic stability and promote gowth. The chal- program in Per. It is generally consistent with the lenge and test of the Govemment's resolve will be fidngs and recoendatons of the analysis con- to what extent cutrent and future policies and pro- tamed in this repot The stratea reogizes that grams are governed by that strategy. The recent the allevation of poverty in Peru demands essen- improvement in PONCODES is an encouraging tially an economic strategy. The objective is to sign. But in order to ensure that the poor reap the improve the living conditions of the extremely benefits of adjustment, the Government should poor tbrougb spm in the areas of food assis- strengthen the social services most critical for lance, health, education and employment genera- them and provide more effective safety nets for the tion precs most vulnerable. xvii  PERM. Socia Seito Cmuponeas fer Poverty Aflwlatloa Sb*at Low attendane rates for poor Offer school leeding programsi in Sdw eoeFuftn Prf*a children, partculary in the rura these areas Sieram Maaingade Sdwoo Project Highl epetiton rate, pdatiulary for Inceas the Internal efficiency of MiVJ*lrd $dwdo Projea* fth poo and in rural aesschools in poor areas, in particular by Improving conditions In rural Textook PM*jct mutgaeschools. Provision of textbooks; training mafteras, and teacher training geared to the reqirmetsof muligrad. schools and for other schools in poor -waa urban and rural areas& Improve quality and attendance, in &Strengateig IWPre nWy pre.scoo program. Improve Educati Series Pr*jct preparation of chidren for school in the PRONOIT and Govefnment-r persistent r higllitry rate among Support a program to teach them LMteCa Projec non-Spanish speaking woume basic functional skills, ielying on N100s. Qualit of car for vulneable grops - Provide pre-natal anti-Otetnus mothrs and hiuldren - Is low, imunizton and hron uplements, prticully in terms of the mber of monitor weiSgt gain and provide food contacts supplement, if needed, and trie personne for high-risk deliveries. Train birth attendants for low-risk deliveries. Inrease the covaeage and ftequeny Chid Growth and of community- based growt Developmet Program "R) moitrig,partiuary amon chiodren under two. l dest. in Italcs refr to projerpvUafle proposed by the Gownwwu.m hoge in iardrwd pim refer to dng Gatea pGeiwprogra cL. xiI  PEU: Socl Sector Copoeut for Poverty Aleviion Staiq Smnmay Table Jasuesddh Gormalogrm Declining and low coverage of Effors should be made to increase Child Growth and vaccinations for chdken under one the vaccinaion coverag for children Development Proram (MOE) under one hruwgh heaflt faciitie Low coverage of family plann Stroengthn family planning educai p as and incrs access to contraceptive. Low utlaton of prma health cme Rehabilitate deterioraed faoilites ma &R8*0*89 PbMWY Cnm services by the poor, partularly In improve the supply of basie Bsc He and MNuAm the siera equipment and drugs in hoalth facilides. Poor ditrbution of professionl Examine management and incentive Hma Resore resources. There are not enough healfth isaus for staff. Upgade staff housg Devkpn fAre profssionals in the least-developed for pnmary health care facilides. EJlru, Po" regions nor ough wkg in primary health care. There are not Promote greater us of local Basic HMMt and NMwo enough nurses rsoues troupg the provision of tainig for nonprofesionals for example. Since poor households have lower Promote low-co systems for water Lad, and Edaadon in accoss to public water and sewerage supply and sanitation. Where no Sankado systems, their childrean are more likely sanitation facilites exist, latrnes to suffer from diarwhea should be built. Cholera is a serious health problem Strengthen education campaips, Lats and Educaon in that affts parily the poor ensure availability of supplies to treat Sadn wj acueases, and rehabilitate water systems and intl latines. in some areas, a substantial proporton Strengthen hospital emergency of the poor use hospital services services in poor areas Absence of norms and sndards for Tne Government should develop and nutrition interventons monitor compliance with sandards in three key areas: O unit costs for intervention; (i) food assistance programming practices; and (i) information collection and impact evauation. No agency of the Government is The Government shoult assign this responible for mobiliing resources fucion to the Ministry of Health. *Il in itaics refer to proct pres proposed by dw Govenmeant hose in sndwd ptn refer to exisfnS Govwnmew prrmr. xx~.  PERU: Soda Sector Componet for Povet Afevim Stratey -y Tab I ssues Reconumendatim Govenment Prorm' Lack of a sysem for nutrition Small sentiDe populaton suveilance on a naional level represontave of importnt taget groups should be monitored. Absence of a framework for nutriton Government should implement inteention leads to duplicafion of nutrition pla functions, a lack of attention to acheving major improvements in nutrit status alid less than optimal resource use Pattern of growth tring amoong EC campaign should be developed to Child Growth and childen during weaing period promote ppropriate waning Development Program (MO)D prctios. Goiter is endemic in a8 pereut Of Goverment should conider National Pogram to Control communides in the sierra and selva. subsidizing the incerase in production Goiter and Endemic Cretinim Anemia is also a public health problem costs of iodized salt aad involve small (PRONABCE) as is vitamin A deficiency produetion facilities which market salt from natura sources. Iron supplementation for pregnant women; semi-anal vitamin A distribution for children. Food As e Food assistance does not reach The Governument should examine Vaso de Leche important target groups among the alterna mchasms to reacb these poor, particularly households in the groups such as food coupons and rural sierra where food security has introduce pilot program. The Vaso de declined. Also, the largest proportion Leche program should strengthen the of beneficiaries of the Vaso de Leche quality of management and control. program are school-aged children. Nearly 20 percent of its beneficiaries Food asdssnce to mothers and PANFAR are not poor. children should be expanded. Some commodities in food assistance The least expensive sources if programs are not the least expensive nutrients acceptable to benefi.;aries sources of nutrients, for example, milk should be selected as commodities. in the Vaso de Leche program Also staple foods used in assistanc programs should be fortified with iron. r r*ae. in ltalics refer to project profiles proposed by the Gowrment. hose in standard print refer to wxisng Gowernmnt programs. xzci  PERU: Soca Sector Componeb for Povr AblviaUon Strate -UMM Table Jmes GovermenProam Impact of food assstance on Beoficiary raions should be based nuridonal status is likely to be on an undersanding of the nutrient negligibl, gaps of participants. Food asistance needs to be PANFAR acompanied by complementay healh and nutrition ducation measures, Including breast-feeding and child growth and dovelopment monitouing. La Escola Defiende La Vida does not Program should rt chidren in La BEcuela Defiende La Vida reach poores and most vulonerable and grades 1.4 and those in pow areas, has mi nutriional impact instead of concetratg in I3ma. Prgram should onsmr otnuity i feeding. Employmnt Program How to ensure that program reaches Program should be designed to FONCODES poor while meeting poverty alleviation encourage self-selection by the poor. objctdves with minimum While less than the tinimum wage administrative coat would improv targeting, it has some disadvanaWs. Povrty alleviadon objectives may not be met and the participation of pdvate contractors would be discouraged. For thos reasons, the minimum wage should be offered. Codsderation should also be given to geographica targeting. Adminstration of employment Demand-driven and promotion of the FONCODES programs use of private conactors. * Males in Italcs rfr to project profies proposed by die Govermwn Those n sard prpnt rer to edsLng Goewnentprogranm. xxii  Resumen y conclusones 1. Uno de los legados del pobre dosempftio econdmico del Perd es la persistencia de eledos niveles de pobreza en alguras regiones y grupos tnicos, y la dismlnucidn de los niveles de vida de otros. For varias razones, la inlroduccidn de importantes reformas ocondmicas ofre una oportunidad niuca tanto al Goblerno como a quienes proporcionan apoyo financieto al Perd pars consider un programa de allvio de la pobreza. Primero, la experiencia internacondl muestra quo es imposible lograr una reduccl6n significativa y duradera de la pobreza sin un crecimiento econ6mico de base amplia. Hasta ahora en el Perd no exstfan la estabilidad macroecon6mica, el marco administrativo l la estcra de incenos que conducen al crecimiento. Esta situacion esta cambiando, y con rapidez. Segundo, una de las razones del escaso crecimiento registrado era la participacion excesiva del Estado en la actividad econdmica. Un elemento dave de las rformas es la reduccidn del papel del Estado. A medida que el sector pdblico se redre de los soctres en que su intervencidn afectaba negativamento los resultados -trabajo, mercados flncieros y produccion-, liberara recursos para otras eras en que puede y debe hacer un aporte positivo, a saber, la prestacidn de serviclos pdiblcos tales como educacion y salud. Tercero, en el mediano y largo plazo, la aplicacid de las reformas deberfa reducir la pobreza al ofrecer mas oporxnidades a los pobres para utilizar so activos, como la mano de obra y las tierras. Sin embargo, en el corto plazo es posible quo algunas de las medidas que se apliquen ocasionen dificultades transitorlas. Tambien le tomara tiempo a la economfa responder a la liber;izaci6n de los mercados, y algunos grupos no estan en condiciones do participar plenamente. Se requiere aplicar un programa de alivio de la pobreza - tema central del presento informe- dirigido a grupos especfficos, con incluslon de servicios sociales, destinado a proteger a los grupos mis vulnerables y brindar asistencia a otros, a fin de que puedan aprovechar las nuevas oportunidades que se presenten y este es el tema central de este informe. 2. Las posibilidades prometedoras quo tenfa el Perl se vieron fnstadas durante treinta afilos de fuerte intervencion estatal en la actividad economica, que se tradujo en la institucion de una estructura jurfdics y un entorno en materia de polfticas que eran incompatibles con el crecimiento. El crecimiento excesivo del Estado condujo a un despilfarro de recursos y al estancamiento econ6mico. Debido a la fWta de crecimiento y a la existencia de mercados rfgidos y corrados, muy pocos grupos del pafts tendan acceso a los elementos necesarios para mejorar sus medios de vida. Las polfticas pdblicas distorsionaron casi todos los mercados de la economfa. La polftica comercial se fundamentaba en una estrategia de sustitucion de importaciones, con elevados aranceles y muchas barrens no arancelarias. La disminucidn de la recaudaci6n de impuestos contribuyd al deterioro del desempeho fiscal y redujo la disponibilidad de recursos para el funcionamiento y mantenimiento de los servicios pdblicos esenciales, y la inversion en los mismos. Incluso las polfticas y programas que se establecieron para beneficiar a los trabajadores y agricultores, como las leyes de estabilidad laboral y la reforma agraria, resultaron  pejudiclales para esos grupos y para la economia. Los salarlos reales cayeron despuds de 1970 y disminuy6 el empleo en el sector fonnal. El sector agrfcola creci6 tan sdlo a la mitad de la tasa de auirento de la poblacidn, brindando muy pocas oportunidades ara que mejoraran los ingresos de la poblacidn rural. 3. La explicacin que dio el Presidente Garcfa de la situacion de Inflaci6n crdnica y lento crecimiento era quo el Perd se encontraba atapado en la wtrapa de la deudae: el servicio de la deuda extrna acelerarfa It devaluacidn y Ia inflaci6n, acabarta con el ahorro interno y reducirfa la Inversi6n. En consecencla, su Goblerno (1985-90) establecid un tope para el servicio de la deuda externa, ijindolo on el 10% del valor de las exportaciones, y mis adelante suspendid totalmente los pagos, Impuso amplios -controles cambiarios y aumento el proteccionismo. Asimismo, el Gobierno aumento el salario mflimo, el credito y las subvenciones, redujo la tam del impuesto al valor agregado y dispuso una rebaja de los precios del sector piblico. Esta estrategia provoco un elevado deficit fiscal, quo se financi con la creacion de dinero. A partir de 1987 el mercado perdio conflanza, se produjo un rebrote inflacionario y el producto de la economfa y los salarios reales disminuyeron drusticamente. La desacertada gestion econdmica alcanz6 el punto culminante en el perbodo 1989-90 y se reflejd en la biperinflacion. 4. wos pobres resultados de la economfa son un factor que explica las malas condiciones de salud existentes en el PenS. Entre todos los palses de Ia region, el Perd ocupa casi el lltimo lugar en los indicadores de salud. En 1991 la epidemia do c6lera demostro en forma dramatica las precarias condiciones sanitarias imperantes en todo el pafs. Sin embargo, en materia de educacidn, esti cerca del primer lugar en lo que respecta a la proporcion de alumnos matricutados en escuelas prtmaria y secundaria, pero el elevado porcentaje de repitentes y la mala calidad de la ensefla representan un problema. La disponibitidad de recursos pdblicos para prestar srvicios socWales va en disminucion debido a la brusca reduccidn del gasto pdbico global en los iUtimos cinco aflos. La declinaci6n se explica por varios factores, entre los que figura la grave recesi6n y la desaparicion casi por completo del sistema impositivo del pats. Se protegi6 a los sectores sociales de las reducciones mais extremas que experimentaron otras esferas pdblicas. Sin embargo, debido a la disminucion de la disponibilidad total de recursos, el Perd suele gastar menos quo sus pakses vecinos en estos sectores. 5. En agosto do 1990, el Gobierno de Fujimori puso en marcha un programa de estabilizaci6n y reforma estructural de tipo ortodoxo do gran envergadura. En la etapa inicial, el Gobierno adopt6 dristicas medidas desdnadas a estabilizar la economfa y restablecer los lazos con la comunidad financiera internacional. La segunda etapa de la reforma de polfticas comdz6 en marzo de 1991 y se baso en la adopcidn de una serie de medidas estructurales de base amplia. El proposito de tales reformas era promover la competitividad y desreglamentar la actividad econ6mica. Para reducir la pobreza se requieren varias reformas fudamentales. La capacidad del Perd para invertir ia brusca cabda de las recaudaciones impositivas es el punto central para recuperar el equilibrio fiscal. Tambidn resulta vital a fin de garantizar la capacidad del Gobierno para proporcionar servicios bisicos en el largo plazo. El aumento del empleo y los salarios en las zonas urbanas es un factor importante que determinarIl 01 ritmo que tendra la reduccidn de la pobreza, tanbo por su influencia directa en la actal  poblacidn urbana pobre como por las oportunidades que crme pan la mlgracidn desd. las zonas rurales. La mayor neutralidad del sistema de comerco puede respaldar un nwdelo de expansion industrial con un uso m4s intensivo de mano de obra en los sectores que compiten con las Importaciones, comno tambien en e1 de las exportaciones. El Goblerno ha avanzado con rapidez y arrojo para liberaliw el sistema de comercio. Sin embargo, la reforma de este sector resuta mis eflcaz si los factores de produccidn tienen libertad para responder a las fuerzas del mercado. En el caso del Perd, las polifticas estatales existentes desde el decenio de 1960 han restringido fuertmemnte el movimiento de los factores. Para poder ofrecor mis oportunidades de empleo urbano, una reforma dave es la desreglamentacdn del mercado de trabajo. Las poifticas de fomento del desarrollo rural tamblen constltuyen un elemento importante de la estrategia para aliviar la pobreza. 6. El crecimiento es un com onente importante de esta estrategia, pero no el 1nico. Es preciso aplicar progranu que permitan asegurar que los pobres puedan aprovechar las oportunidades de arabajo que se presenten y proteger a algunos grupos vulnerables que no estAn en condiciones de participar plenamente en la economfa. Para poder disefar estos tipos de programas se requiere informaci6n sobre los pobres. El perfil de pobreza del Perd quo se elabora en el present. informe se basa en datos recogidos en una encuesta sobre.niveles de vida realizada en los meses de octubre y noviembre de 1991. Se calculan dos Ifneas de pobreza. Las unidades familiares se clasifican como extremadamente pobres si sus gastos totales son inferiores al costo de una canasta b$sica de alimentos. Se clasifican como pobres si sus gastos totales son inferiores al costo de una canasta basica de alimentos, mis una estimaci6n de los gastos por concepto de artfculos no alimentarios. Aproximadanente la mitad de la poblacidn estudiada cae bajo la lIfnea superior de ambas Ifneas de pobreza, y la quinta parte cae bajo e0 Ifnite inferior. 7. 4Pdnde viven los pobres? Al comparar las cuatro regiones del muestreo (LJima, litoral urbano, y sierra urbana y rural), la incidencia de pobreza es mayor en la sierra rural. En esa zona, dos torcios de las unidades familiares son pobres y el 47% del total son extremadamente pobres. Tan sdlo el 10% de las unidades familiares de Lima son extremadamente pobres, en comparaci6n con alrededor del 20% en el litoral urbano y en las regiones de la sierra. En cada una de estas tres regiones, el porcentaje de unidades familiares pobres alcanza a aproximadamente el 50%. Se estima que la sierra rural alberga la mayor cantidad de personas extremadamente pobres (1,6 millones). Por su tamalho, en Lima vive el mayor ntlmero de pobres (2,5 millones). 8. Por lo general, una persona pobre vive en una unidad familiar mas extensa que una persona no pobre, que en promedio incluye a uno y medio individuos m4s. Cada trabajador perteneciente a un hogar pobre sustenta a cuatro miembros de la familia. En el caso de los no pobres, esta cifra baja a tres. El consumo de alimentos per ctpita en una unidad familiar extremadamente pobre representa s6lo el 40%, en comparaci6n con el de otros hogares, y la misma relacion en lo que respecta al consumo total alcanza al 30%. 9. Entre la poblaci6n pobre, s6lo en Lima se registra una desproporcion deuriidades familiares encabezadas por una mujer. Las poblaciones indfgenas en el Perd estAn desfavorecidas. Consideradas en conjunto, las unidades familiares  zeabezadas por hablantes de quochua y almar representan el 40% de la poblaci6n extremadamente pobre y alrededor del 25% do la poblacidn pobre. En Lima, es algo mis probable encontrar inmigrantes quo no inmigrantes entre los pobres. Estos so encuentran mayoritariamente en dos agrupaclones ocupacionales: los trabajadores independientes y los trabajadores del sector privado. 10. Los aimentos bsioos quo representan la mayor proporclon de los gastos do la poblacion pobre son 0l aoz, el pan, el az Icar, los tubEculos y la came. Los alimentos mas importantes que so obtienen mediante produccidn propia son los tuberculos, seguidos de la came y las hortalizas. Los gastos mis importantes por concepto de productos no alimentarios corresponden a detergentes, transporte pdbilco, jab6n y vestuario. A pesar do que los pobres serin los boneficiarios ds cualquier rebaja do los preclos de estos productos bisicos como resultado de las medidas de desreglamentacion y liberalizacion del comercio, no hay nhngdn producto ni servicio que pueda subvencionarse con objeto do beneficiar en verdad a los pobres. 11. Poco mis de la mitad de las unidades familiares extremadamente pobres tienen acceso a una red p6blica do abastecimiento de agua, en comparacidn con el 80% de la muestra completa. La poblacion madamente pobre quo tiens acceso a una red piblica se ha visto mis afectada por las reducciones del sumnistro quo otros grupos. Menos del 30% de los extremadamente pobres cuentan con servicio pdbllco de alcantarfllado, en comparacion con poco mis del 60% de la muestra completa. Los niveles do educacion estin estrechamonte vinculados a la pobreza. Es mis probable encontrar jefes de hogar que no han completado la enseflanza secundaria entre los pobres. 12. En lo que respecta a las unidades familiares quo poseen tierras, los pobres tienen aproxhnadatente 50% menos superficie quo los no pobres. Cerca do un tercio de los hogares pobres poseen tisrra do regadfo, en comparaci6n con alrededor de la mitad de los no pobres. En el caso do las unidades familiares mis pobres do la s3erra rral, todos o al menos la mitad do los trabajadores estan ocupados en actividades agrfcolas, en tanto quo en el do los hogares quo gozan do mejor situaci6n, una mayor proporci6n de los trabajadores realizan otras labores en forma independiente. Los principales cultivos quo producen los pobres de la sierra rural son la papa, la cebada y el trigo. Los pobres producen principalmente ma