Since 1999, the International Monetary Fund has placed poverty reduction at the very center of its assistance to low-income countries. Last month, the Second Southeast Asia-Pacific Conference on Poverty Reduction Strategies was held in Phnom Penh, drawing together 150 persons from Cambodia and other Asian countries, and the IMF and the World Bank. A main conclusion was that many countries have been successful in formulating sound strategies for poverty. But policy is just the start; the poor want results.
One of the objectives of the IMF initiative is to help countries meet the UN Millennium Development goals. The most crucial of these is halving poverty by 2015 compared to 1990 levels. Central to the approach is a Poverty Reduction Strategy Paper, which sets out a country’s policies and programs to promote growth and reduce poverty.
Is this approach actually making a difference? That is one of the key questions of the Phnom Penh conference. In countries where the strategies are implemented, pro-poor spending, such as on health and education, has increased by an average of about 1.5 percent of Gross Domestic Product.
Cambodia’s first program under the IMF’s concessional lending facility from 1990 to 2003 contributed in several ways to putting the country on track toward achieving the Millenium Development Goals. Priority spending (health, education agriculture and rural development), while still very low, almost doubled from slightly less than 2 percent of GDP in 1999 to more than 3.5 percent by 2002.
In the period ahead, the government of Cambodia and the IMF, will redouble efforts to secure pro-poor growth. The IMF’s assistance is centered on supporting Cambodia’s poverty reduction strategy, launched in March 2003. The challenge of decreasing the percentage of the population in extreme poverty from 39 percent in 1993 to 19.5 percent in 2015 is daunting. It is achievable, but only with strong, persistent policy efforts and government tenacity in implementing the reforms.
Robert Hagemann
IMF Resident Representative
in Cambodia Phnom Penh