Income Support for the Poorest: A Review of Experience in Eastern Europe and Central Asia

Abstract

Most countries in the world aspire to protect poorest and most vulnerable families from destitution and thus provide some type of income support to those who are very poor. These programs are often layered into social policy along with other transfers, subsidies, or services. The way to best provide such last-resort income support (LRIS) and its role in wider social policy is a matter of some complexity, much experimentation, and much study. In Eastern Europe and Central Asia, 28 of 30 countries operate LRIS programs. This study examines the experience of LRIS programs in Eastern Europe and Central Asia. It documents the outcomes of such programs throughout the region in terms of expenditure, coverage, targeting, and simulated effects on poverty and inequality. For a subset of countries, the study documents and draws lessons from the design and implementation arrangements - institutional frameworks and administrative structures, eligibility determination, benefits and conditions, governance mechanisms, and administrative costs on the basis of information gleaned during in-depth country engagements that have extended a decade or more (Albania, Armenia, Bulgaria, the Kyrgyz Republic, Lithuania, and Romania) and other detailed work available from newer or more specific engagements (Croatia, the Russian Federation, Serbia, Ukraine, and Uzbekistan). The report is organized as follows: chapter one gives introduction. Chapter two provides an overview of the role of LRIS in the wider social assistance policies of Eastern Europe and Central Asia. Chapter three looks into the institutional and financing arrangements of the LRIS programs in the case study countries. Chapter four covers one of the two most charged issues in narrowly targeted LRIS programs - how eligibility is determined. Chapter five takes up the other charged issue in these programs - the benefit formula and how labor disincentives can be held in check with the guaranteed minimum income design. Chapter six focuses on two key elements of control and accountability systems in LRIS programs - modern management information systems and strategies to reduce error, fraud, and corruption. Chapter seven examines the administrative costs of the LRIS programs in the case study countries. Chapter eight highlights and summarizes the lessons.