Meanwhile, the food and fuel crisis may not be over. International commodity price levels have not returned to pre-2007 levels. In addition, falling currencies in some countries in the region are resulting in a new round of price increases.

Because food represents a very large share of the poor' s total consumption -- in some of the low-income countries of Europe and Central Asia, the food share of consumption among the poor is 70 to 80 percent -- the poorest consumers will again be vulnerable, said the World Bank report.

In addition, in a number of countries, such as Belarus, Moldova, and Ukraine, the utility reform program remains largely incomplete. As a result, a number of countries will have to adjust their energy tariffs to cost-recovery levels in the coming years.

Over the recovery period following the 1998 Russian crisis through 2006, more than 50 million people moved out of poverty in the region. However, the poverty impact of the crisis will be enormous, the World Bank warned.

The rapidly deteriorating global economic environment is eroding the region's substantial gains and, given the increased poverty projections, is threatening the welfare of a total of about 160 million people -- close to 40 million people who are poor and about 120 million people who are just above the poverty line, said the Bank.

According to the report, it is the middle-income Commonwealth of Independent (CIS) countries that have seen the largest and most significant downward revisions to their gross domestic product growth projections.

Lessons from the region's own experiences with previous crises suggest that temporary economic shocks have a lasting impact on human development, as families cut back their education and health investments in response to a banking or exchange rate crisis, said the report.

Against this background, social safety nets will play a crucial role and should be protected even though revenues are expected to fall. Indeed, protecting these programs -- and possibly expanding the well-performing ones where some reallocation of resources is possible -- is critical to helping families deal with the crisis.

"Governments need to focus on 'smart' spending to protect their poor," said Barbone.

"Safety nets -- cash transfers, social pensions, and targeted anti-poverty programs -- will be among those items likely to be cut as revenues fall, but it is precisely these programs that are needed more now than ever before," he added.

The region's social protection systems currently vary in size and targeting performance across countries, the World Bank said.

However, according to the report, most countries in the region have at least one targeted safety net program that can possibly be scaled up in response to the crisis by increasing the value of benefits they provide or by expanding their coverage to reach those households still currently outside the system.

(Xinhua News Agency December 3, 2009)