POVERTY REMAINS ONE OF RUSSIA'S MAJOR CHALLENGES - WB EXPERT

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MOSCOW, November 22 (RIA Novosti) - The World Bank has conducted an independent study to gauge Russia's current level of poverty, WB economist John Litvak told a Moscow press conference Monday.

WB experts based their study not on per capita incomes, but on household consumption levels, bearing in mind climatic and price factors, Mr Litvak reported. According to their findings, the share of low-income households in Russia is actually reducing at a faster pace than official statistics suggest. Since the 1998 financial crisis, however, poverty levels have been higher than Russia's State Statistics Committee will have us believe, the WB expert noted.

In the 1999-to-2002 period, Russia managed to reduce poverty by half, Mr Litvak reported. And this year, the poverty level may go below 20 percent, he added.

That said, poverty remains a key challenge facing Russia, stressed the WB expert. He believes it will be quite hard for the Russian government to maintain population income growth at its current rate.

It is highly important to rightly identify the character and the structure of poverty, Mr Litvak pointed out. As far as the WB knows, there remains a high risk of impoverishment for people living in rural areas and small towns, big families, and people with no college or university education.

Russia's North Caucasus and Arctic regions pose the greatest challenge of all as their employment rates are higher than the nation's average, said Mr Litvak. The former boast fertile lands, so the population there can at least support itself with farming. The latter, by contrast, have no resources for a self-sustaining economy, so their inhabitants just have to be resettled, argues the WB expert. As he sees it, the federal government's planned replacement of welfare privileges with cash payments will make aid for disadvantaged citizens more focused. He described the reform as an important step forward, saying that it would enable Russian authorities to prioritize their welfare spending in a more sensible way.

Mr Litvak stressed the importance of focused aid in the fight against poverty, expressing hope that rural communities currently not benefiting from welfare privileges would become better off with the introduction of the cash-based scheme. The new scheme is due to come into force on January 1, 2005.

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