International community collaborates on design of policies to promote poverty reduction

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Page 211

Following are edited excerpts of remarks by IMF Deputy Managing Director Eduardo Aninat at the Development Policy Forum meeting in Berlin on June 15. The full text is available on the IMF’s website (www.imf.org).

The international community last year adopted a new approach to poverty reduction. The key innovation is deriving programs from comprehensive strategies for poverty reduction drawn up by individual governments, with the involvement of a broad range of key stakeholders, including civil society and the donor community. The strategy for each country, which is to be laid out in its so-called poverty reduction strategy paper (PRSP), will provide a focused policy agenda and promote government accountability by fostering a national dialogue on economic and social policies.

This is a collaborative effort of the international community, with each partner playing a vital role. The World Bank, along with the regional development banks and UN agencies, takes the lead on discussions with authorities on the design of policies aimed at poverty reduction—including social safety nets to protect the poor and vulnerable. The IMF will do its part by supporting economic policies that provide a conducive environment for sustainable growth.

So what is new? Let me answer from the IMF’s perspective, focusing on five key elements.

First, we have changed the objectives of the IMF’s concessional lending facility to explicitly include poverty reduction. For that reason, we reshaped the facility, previously known as the Enhanced Structural Adjustment Facility, into the Poverty Reduction and Growth Facility [PRGF]. What this means in practice is that we will help countries ensure that economic policies are pro-poor. Under the PRGF, countries will devise medium-term budgetary frameworks that contain explicit and specific poverty-reducing policies. The IMF will rely on the World Bank and other multilateral regional development banks for an assessment of the priorities included in these budgets and their costing. We will then help to ensure that these outlays are consistent with the available financing and with macroeconomic stability and faster, sustainable growth. If available financing is insufficient to meet priority spending needs in countries where additional resources could be used effectively, we will actively support countries in seeking additional resources from the donor...