IMF Strategy Aims at Poor Policies for Poor

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


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