Poverty, Children and Transition in Kyrgyzstan: Some Reflections from the Field.

• Author: Howell, Jude

Compared with other Central Asian countries, Kyrgyzstan, from an early stage, seemed to embrace most openly the recommendations of multilateral institutions to liberalize its economy, promote privatization and move from a planned to a market economy. Heavily dependent in the past on the Soviet Union market for exports and for its purchases of capital inputs, Kyrgyzstan embarked upon a fundamental restructuring of its economy. By 1995 it was one of the few countries in the region enjoying a positive growth rate, albeit equal only to 1 percent. Yet, despite this improvement in macroeconomic performance, the process of transition has taken a heavy toll on production, trade and social welfare provision, leading to declining standards of living and to new forms of poverty.

This article considers the effects of the transition to a market economy on children in Kyrgyzstan. In doing so, the article seeks to counterbalance the tendency for analyses of transition to focus both on the aggregate (at the expense of particular groups such as children, women, farmers or workers) and on the macroeconomic level (thus neglecting the local). It thus attempts not only to draw attention to specific effects on children, who tend to be underrepresented in the literature on transition, but also on the regional diversity of such effects.(1)

The article begins by providing an overview of the economic changes in Kyrgyzstan since it gained political independence in 1991. The impact of the crisis is then explored in three different economic contexts, namely the urban, the agricultural and the agro-pastoral. The next section focuses on the impact of transition on children in poor households, drawing attention not only to aspects of health and education, but also to the psychological consequences of rapid impoverishment.

This article is based on secondary sources as well as fieldwork carried out in the two southern regions of Osh and Djalalabad in Kyrgyzstan in the autumn of 1994.(2) In order to capture the regional variation in the effects of transition on children, the fieldwork was located in agro-pastoral, agricultural and urban areas.(3) Further insights were gleaned through interviews with local government officials, representatives of nongovernmental organizations and village leaders. In order to capture children's perceptions of the crisis, children in village schools were asked to write an account of their daily lives.(4)

BACKGROUND TO TRANSITION

The dissolution of the Soviet Union in December 1991 marked a watershed in the history of the Central Asian republics.(5) It not only paved the way for long-awaited independence but also undermined the fragile basis of their economies. As former Leninist parties were replaced by purportedly more democratic organizations in Uzbekistan, Kazakstan and Kyrgyzstan, the ability of new leaders to steer a course through the crisis differed considerably. As inter-republic trade collapsed and numerous subsidies and transfers from Moscow to the Central Asian states abruptly ended, industrial output and GDP growth rates plummeted, in turn affecting government revenue and expenditure.

The Kyrgyz economy suffered a sharp fall in production, as factories could no longer secure inputs and find markets for their products. Between 1992 and 1993, gross domestic product fell by 16.4 percent.(6) In 1995 output was still 45 percent below its 1991 level.(7) As enterprises began to incur losses and reduce or stop production, working hours were shortened and workers sent home on unpaid leave. By the end of June 1993, 100,000 workers had been affected in this way.(8) In the worst instances, enterprises were forced to lay off employees. In the first six months of 1994, 12 percent of industrial enterprises stopped production and 19,000 people were laid off, more than twice the number in the previous year.(9)

This breakdown of the economy, along with price liberalization and high inflation, resulted in a decline in living standards.(10) Compared with 1989, when 35 percent of the population was estimated to be poor, by May 1993 more than 80 percent was considered underprovisioned.(11) According to a World Bank multipurpose survey carried out in August 1993, 39.7 percent of households and 45.4 percent of individuals were classified as poor.(12) Furthermore, the experience of transition brought to the surface striking differences between urban and rural areas. According to the same survey in the Djalalabad region, 30 percent of urban households were classified as poor, compared to 71.4 percent in rural areas. Similarly, in the Osh region, 39.3 percent of urban households surveyed were found to be poor, compared to 50.5 percent in rural areas.(13)

The decline in living standards and the creation of new groups of poor, such as unemployed and unpaid workers, put added pressure on the state, yet the capacity of the state itself to respond was being rapidly weakened. With the abrupt end of transfers and subsidies from the Soviet Union, the shrinking of the domestic tax base and the breakdown of inter-republic trade, the government had fewer resources with which to alleviate the effects of transition. About 50 percent of Kyrgyzstan's budgetary expenditures had been financed in the past by subsidies from Moscow.(14) Moreover, they had been heavily dependent upon inter-republic trade, with 98 percent of all its exports destined for the USSR and 73 percent of imports originating from there.(15)

During the Soviet period, a wide range of allowances was paid, covering the elderly, war veterans, mothers with more than 10 children, unmarried mothers, widows and the disabled. These allowances were enjoyed by almost half of the population. After independence, the new government attempted to maintain and extend previous provision levels, but with rising prices eroding the value of allowances, the eligibility criteria for receiving benefits were gradually reworked, linking these directly to the minimum wage. With a fiscal deficit standing at 13 percent of GDP in 1996, it was clear that the comprehensive welfare provisions enjoyed in the past were no longer viable.

In response to this sudden economic collapse and deterioration in living standards, international donors began to provide emergency relief in the form of food, clothing, financial advice and technical assistance, gradually moving into longer-term developmental assistance. In 1993 Kyrgyzstan became the first country in the Commonwealth of Independent States to agree to an IMF stand-by arrangement. The following year it entered into a three-year Enhanced Structural Adjustment Facility Arrangement with the IMF. Since joining the World Bank in 1992, Kyrgyzstan has received credits equal to U.S.$318 million.

The World Bank has provided assistance with stabilization, privatization reforms, agriculture, financial reforms, social safety nets and enterprise restructuring. Together with the European Bank of Reconstruction and Development (EBRD), it co-financed a telecommunications project in 1994. Similarly, in conjunction with the Asian Development Bank, it co-sponsored a District Heating Modernization Project. Nongovernmental organizations such as the Save the Children Fund, Mercy Corps and INTRAC have all begun to operate in Kyrgyzstan, encouraging the development of domestic nongovernmental organizations, providing relief and contributing to long-term reform of the social welfare sector.

International donors have been particularly keen on providing support to Kyrgyzstan, which they have...