April 22, 2010
This story about poverty reduction in Romania was published by EurActiv on 22nd April 2010.
Romania, one of the poorest countries in Europe, has never dealt with poverty reduction in the twenty years since its transition to a market economy, which makes any commitment to the EU’s 2020 poverty reduction goals seem “utopian”. EurActiv Romania reports.
Most Romanians associate the last two decades with a continuous process of impoverishment and deteriorating living standards, according to Romania’s Life Quality Research Institute, quoted by the Financiarul daily.
Starting from an official poverty rate of 7% in the beginning of the 1990s, the number of people in this category had tripled by 2008, when the economic crisis began.
But this evolution was uneven, the research reveals. In 2007, there were approximately 2.1 million poor people recorded in official statistics. One year later, their numbers had decreased by one million, mainly due to emigration. Improving living standards were also a factor, but a much less relevant one, the institute says.
The research identifies several causes of such poverty: unemployment, unfavourable exchange rates for foreign currency and money transfers by Romanians abroad, as well as poor interest rates in the banking sector.
Unemployment is on the rise, with the International Monetary Fund predicting a 10% rate by the end of this year. In comparison, unemployment stood at 6.1% in 2007, 4.1% in 2008 and 4.4% in 2009.
Similarly, the exchange rate of the national currency, the leu (lei in plural), changed from three lei to the euro in 2008 to four lei to the euro in 2009. This led to rising interest rates and a higher number of borrowers defaulting on their debt.
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