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Kyrgyzstan to Increase the Guaranteed Minimum Income by 14%


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BISHKEK (24.kg news agency) – The Kyrgyz Republic plans to increase the guaranteed minimum income by 14% in 2015, the head of the Ministry of Social Development Kudaibergen Bazarbaev said this Friday during a meeting with Prime Minister Temir Sariev.

According to him, more than 385,000 people receive the state benefits. Since 2012 the amount of the guaranteed minimum income (GMI) increased annually by 10%. This year its size will also increase.

Following the meeting, the Ministry of Social Development is entrusted to strengthen work on address, timely and quality delivery of public benefits and services, and to develop standards for the provision of social services to enhance their quality and safety.

The GMI is a budget-driven threshold to determine eligibility for the Monthly Benefit for Poor Families (MBPF), a means-tested cash transfer targeted at poor families with children. Families are eligible for the transfer if the family income is below the GMI. The level of the GMI is adjusted on an irregular basis as it depends on available government resources.

The national poverty lines used in the Kyrgyz Republic are derived from nationally representative household survey data. The Kyrgyz Integrated Household Survey (KIHS) collects annually information from more than 5,000 households, which are selected by a 2-stage random sampling process. The KIHS collects detailed information on income and consumption, the demographic composition of the household, labour market participation, assets, housing, land and livestock possession. The data on household expenditure and consumption is then used to analyze consumption patterns of households and to establish two poverty lines, which are set at values covering a minimum consumption basket.

The objective of the food poverty line is to identify the extremely poor households and individuals in the society. Basically, it is set at the monetary value covering the costs of obtaining 2,100 kcal per person per day. Contrary to normative decisions on what a minimum diet of 2,100 kcal should contain, the food poverty line is empirically derived from the KIHS data. It reflects the actual food consumption habits of the Kyrgyz population. More specifically, it looks at food consumption of low income households belonging to the second to fifth consumption deciles, excluding the poorest 10% and the richest 40% of households. 86 different food items account for 97% of total food consumption. Using their respective caloric values and shares in total food consumption, the costs of the minimum food basket is established.

In addition to food, households also have other basic needs, such as shelter, clothing, health and education. The absolute poverty line reflects these additional needs and includes an allowance for non-food goods and services. In order to estimate the non-food allowance, the reference group includes those households with food consumption near the food poverty line (10% above and below). The share of non-food consumption in total consumption of the reference group determines the non-food allowance to be added to the food poverty line. Total household consumption of the reference group consists of 62% food and 38% non-food goods and services.

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