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Enhacing the IMF’s focus on growth and poverty reduction in Low-income countries

Added 02/May/12

Eurodad members Save the Children Norway, the Norwegian Forum for Environment and Development and the Norwegian Church Aid (NCA) have commissioned this report from Development Finance International, to analyse whether the new facilities are living up to this objective, and allowing countries to move faster towards the Millennium Development Goals. They asked DFI to look particularly closely at impact on the health sector. The paper analyses all 37 PRGT agreements, and presents case studies of HondurasMalawi and Sierra Leone, written by local experts closely involved in IMF-government discussions. As the new facilities began only in 2010, this assessment should be seen as preliminary.

The report makes clear that the IMF is not, and should not be, a long-term development lender. However, it has committed to enhancing its focus on growth and poverty reduction through the PRGT, and donors have provided concessional funding to the IMF to support the PRGT on this basis: the facilities should therefore be judged on whether they are achieving this goal. The report also makes clear that it is analysing trends resulting from IMF-government agreements, not ascribing “responsibility” to the IMF for all trends and their impact on MDG prospects.

Overall, the report concludes that there is only very limited evidence of an enhanced focus on growth and poverty reduction compared to the previous PRGF facility programmes: mostly the PRGT has formalized or standardized evolutionary changes which have been occurring since 2000. There have been some steps forward showing increased flexibility by the Fund, but most were introduced before the PRGT, and those relating to macroeconomic policy look increasingly fragile.

Read the full report: Enhacing the IMF’s focus on growth and poverty reduction in Low-income countries