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Policy Brief: Poverty Rate Measurement: International vs National Standards
The use of a standard poverty line to measure poverty is often questioned. This is because the Government of Indonesia through Statistics Indonesia (Badan Pusat Indonesia: BPS) routinely calculates the national poverty line to measure annual progress in development achievements. On the other hand, international organisations, such as the World Bank, also release the results of poverty line calculations for a number of Policy Brief: Poverty Rate Measurement: International vs National Standards Key Messages • The International Poverty Line (IPL) refers to the level of extreme poverty in the base year of 2011, namely those living below US$1.90 PPP per day. The poverty line in Indonesia is measured by calculating the cost of a basket of food consumables needed to fulfill a minimum nutrition requirement of 2,100 kilo calories per person per day. • The use of US$ currency rate in PPP is different to the general understanding of nominal currency exchange rate. The PPP concept is closely related to the definition of the level of prices in each country that constitute the weighted average prices of a number of goods of the same types and weight in the relevant country. • The national standard poverty line calculated by BPS of Rp 425,250 per month per capita is higher than the international standard of US$1.90 PPP and equivalent to an IPL of US$2.50 PPP per day. • Given that these two methodologies are often the subject of debate and news coverage, it is necessary to conduct a further analysis on each methodology to obtain a more comprehensive understanding. countries including Indonesia by using an approach based on purchasing power parity (expressed in US$ PPP) in a certain base year.
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