The main poverty reduction program of the International Monetary Fund has “fallen short of potential” in improving conditions in the worlds poorest countries, an independent report said, according to the World Bank press review Thursday.
The Funds Independent Evaluation Office, which operates independently of IMF management, gave a lukewarm assessment of the plan launched in 1999 by the IMF and World Bank to improve conditions in impoverished nations in Africa and elsewhere.
The study addressed the Poverty Reduction Strategy Papers (PRSP) prepared by the countries and the IMFs lending program to support this strategy known as the Poverty Reduction and Growth Facility (PRGF).
The program “has significant potential, but achievements to date have fallen short of potential, particularly in the areas of relevance to the IMF,” the study concluded. It added that the IMF funding for the program has produced varied results in different countries “but has generally fallen short of the ambitious expectations set out in the original policy documents.”
Problems with the approach included a “failure to address controversial policy issues as well as the absence of clear benchmarks against which to monitor progress.” The report called for greater flexibility in the program “to accommodate the diversity of country political and administrative systems and constraints.”
It also called for “enhancing the “results-orientation” of the approach to allow countries to define – in a manner open to public scrutiny – their own benchmarks and objectives for improving policy-making processes.”
The IMF, responding to the study, said its staff members “broadly support the (panels) recommendations, some of which were identified in previous assessments by the staff. However, staff differ with the IEO on how best to manage the tensions inherent in the PRSP approach.”
The IMF response added that the study recommendations “are too diffuse to provide estimates of their resource implications, although their resource costs are likely to be sizeable based on preliminary reactions of the area departments.”
Meanwhile, the IMFs new Managing Director, Rodrigo Rato, has set up an internal strategic review of the funds operations that will report its results and lay out his priorities at or before the annual meetings in October. It may just pre-empt the review of the Bretton Woods institutions being conducted by the Group of Seven leading industrial countries.
Rato, whose appointment followed a controversial selection procedure, also says that unless there is a change in voting weights – a decision for the shareholders – “we will have to use other tools to guarantee that voices are heard”.
This includes insisting on a broad consensus at the board on policies. He pledged to listen to and represent the views of less powerful shareholders. Policies, he says, should “reflect points of view that are not measured only by quotas”.
Rato defers questions about crisis prevention and the role of the fund in low-income countries until the completion of the internal review. He says he will increase the funds emphasis on regional and global surveillance to complement bilateral reviews, as part of its crisis prevention efforts.
Contingent credit lines he sees as an essential part of the crisis prevention tool kit – as long as they are accompanied by demanding criteria. Rato sees the main role of the fund as primarily limited to macroeconomic analysis, technical assistance, and efforts to help poor countries absorb aid flows efficiently.
– I think the role of the fund in low-income countries is certainly defined by our core business of macroeconomic assistance. I think there is no poverty reduction without macroeconomic stability, noted he.
Kilde: www.worldbank.org
