Building Consensus on Poverty Reduction

• Author: Masood Ahmed
• Position: Deputy Director in the IMF's Policy Development and Review Department

As the twentieth century drew to a close, there was a growing realization among development practitioners that a fundamental change in approach was needed to achieve the international development goals by the target date of 2015-including halving the number of people living on less than $1 a day, reducing maternal and child mortality rates, and universalizing primary education. Despite unprecedented gains in living standards in some countries over the past few decades, poverty continues as a harsh reality in too much of the developing world.The causes lie in part with poor country governments that have not followed through on the policies and programs needed to accelerate growth and eradicate poverty. But they also reflect the uneven record of development assistance and protectionist trade policies and agricultural subsidies in industrial countries, which have dampened profitable investment and growth in the developing world.

Amid the failures, however, there have been islands of good practice and a growing body of evidence on aid effectiveness. These have served as the basis for some radical changes in the international community's approach to poverty reduction, starting in 1998.

* One hundred eighty-nine countries came together at the United Nations Millennium Summit and pledged to act individually and collectively to make the Millennium Development Goals a reality.

* The UN System, bilateral donors, and the international financial institutions all moved to align their assistance programs in support of poverty reduction and the Millennium Development Goals.

* The World Bank launched the Comprehensive Development Framework, emphasizing the interdependence of all elements of development and the importance of country ownership of development agendas.

* The IMF and the Bank decided to base their debt relief and concessional lending on national poverty reduction strategy papers (PRSPs) prepared by low-income countries with the participation of all key stakeholders.

* The IMF replaced the Enhanced Structural Adjustment Facility (ESAF)-its concessional loan facility-with the Poverty Reduction and Growth Facility (PRGF), which explicitly targeted poverty reduction as an objective.

* The IMF and the Bank beefed up the debt initiative for the heavily...