- International Monetary Fund
- Published Date:
- April 2005
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The Global Monitoring Report 2005 is the second in a series of annual reports assessing progress on the policy agenda for achieving the Millennium Development Goals (MDGs) and related outcomes. It is prepared jointly by the staff of the World Bank and the International Monetary Fund (IMF), in close collaboration with partner agencies. This report comes at an important time, when the international development community is taking stock of implementation of the Millennium Declaration in the five years since its adoption and discussing how progress toward the MDGs can be accelerated. We hope that the analysis presented in this report will make a useful contribution to those efforts.
The report’s central message is clear: without early and tangible action to accelerate progress, the MDGs will be seriously jeopardized—especially in Sub-Saharan Africa, which at current trends will fall short of all the goals. At stake are prospects not only for hundreds of millions of people to escape poverty, disease, and illiteracy, but also for long-term peace and security—objectives intimately linked to development. During 2005 the international community must seize the opportunities presented by increased global attention on development to build momentum for the MDGs. Special focus must be given to accelerating progress in Sub-Saharan Africa.
How to generate momentum? This report sets out an agenda spanning the responsibilities of all key actors. Developing countries must take the lead in articulating and implementing development strategies that aim higher. They should build on recent progress on reforms by deepening improvements in policies and governance to achieve stronger economic growth and scale up human development and related key services. The recent pickup in growth in many developing countries, including several Sub-Saharan countries, demonstrates the payoff to reforms.
Developed countries must step up implementation of the commitments they made as part of the Monterrey Consensus. They should substantially increase the volume of development aid and improve its delivery to facilitate more effective use by recipients. And they should show leadership on trade policy reforms that open markets to developing country exports and that give greater coherence to developed country policies in terms of their impact on development. Progress on both aid and trade is crucial—and the need for action urgent.
International financial institutions should strengthen and sharpen their support for this agenda. A priority for us is to strengthen our support for country-led poverty reduction strategies in low-income countries and sharpen our focus on development results. We also need to continue to adapt our approaches and instruments to the evolving and varying needs of middle-income countries. Geared to the needs of both low- and middle-income countries, international financial institutions should also do more and better on global and regional public goods.
With just 10 years until 2015, achieving the MDGs seems daunting, especially in Sub-Saharan Africa. But rapid progress is possible if there is sufficient commitment to reform and support from development partners, within the framework of the enhanced global partnerships envisaged at Monterrey.
James D. Wolfensohn
Rodrigo de Rato
International Monetary Fund
This report has been prepared jointly by the staff of the World Bank and the International Monetary Fund. In preparing the report, staff have collaborated closely with partner institutions—other multilateral development banks, the United Nations, World Trade Organization, Organization for Economic Cooperation and Development and its Development Assistance Committee, and the European Commission. The cooperation and support of staff of these institutions are gratefully acknowledged.
Zia Qureshi was the lead author and manager of the report. The work was carried out under the general guidance of Shengman Zhang, Managing Director, World Bank. The core team included Barbara Bruns, Punam Chuhan, Poonam Gupta, Bernard Hoekman, Marcelo Olarreaga, Joanne Salop, and Lada Strelkova (World Bank) and Andrew Berg, Peter Fallon, Elliott Harris, and Carlos Leite (IMF).
A number of other staff made contributions. They included the following from the World Bank: Dina Abu-Ghaida, Olusoji Adeyi, Christine Allison, Jorge Araujo, Gilles Bauche, Rosemary Bellew, Rene Bonnel, Eduard Bos, Donald Bundy, Paul Collier, Edgardo Campos, Jose De Luna Martinez, William Dorotinsky, Poul Engberg-Pedersen, Antonio Estache, Qiu Fang, Manuel Felix, Ariel Fiszbein, Lucia Fort, Paul Gertler, Alison Gillies, Bee Ean Gooi, Pablo Gottret, Laura Gregory, Engilbert Gudmundsson, Christopher Hall, Mary Hallward-Driemeier, Jonathan Halpern, Kirk Hamilton, Amy Heyman, Barbry Keller, Steve Knack, Aart Kraay, Inna Kushnarova, Ranjit Lamech, Victoria Levin, Magnus Lindelow, Susan McAdams, Caralee McLiesh, Raymond Muhula, Mohua Mukherjee, Alessandro Nicita, Eustache Ouayoro, Sulekha Patel, Long Quach, Claudio Raddatz, Gary Reid, Viorica Revutchi, Klas Ringskog, Maria Rivero-Fuentes, George Schieber, Susan Sebastian, Shekhar Shah, Nicola Smithers, Ahmet Soylemezoglu, Abigail Spring, Mark Sundberg, Eric Swanson, Marilou Uy, Dominique Van Der Mensbrugghe, Linda Van Gelder, Christel Vermeersch, Marco Vujicic, Dana Weist, Jerome Wolgin, and Alan Wright.
Other contributors from the IMF included David Andrews, Jean Clément, Sanjeev Gupta, Michael Hadjimichael, Peter Heller, Simon Johnson, Godfrey Kalinga, Ritha Khemani, Hans Peter Lankes, Brad McDonald, Wayne Mitchell, Catherine Pattillo, Arvind Subramanian, and Chris Wu.
Guidance received from the Executive Directors of the Bank and the Fund during discussions of the draft report is gratefully acknowledged. The report has also benefited from many useful comments and suggestions received from Bank and Fund management and staff in the course of the preparation and review of the report. The World Bank’s Office of the Publisher managed the editorial, design, production, and printing of the book. In particular, Susan Graham, Paul Holtz, and Monika Lynde deserve special mention for their skill and professionalism in editing and producing this book on a very tight schedule.
Abbreviations and AcronymsACP
African, Caribbean, and PacificACT
Artemisinin combination treatmentAfDB
African Development BankAGOA
African Growth and Opportunity Acceleration ActAIDS
Acquired immune deficiency syndromeAPRM
African Peer Review MechanismADB
Asian Development BankASEAN
Association of South-East Asian NationsBEEP
Business Environment and Enterprise Performance SurveyCAS
Country assistance strategyCPIA
Country policy and institutional assessmentDAC
Development Assistance Committee (OECD)DANIDA
Danish International Development AgencyDFID
U.K. Department for International DevelopmentDIME
Development Impact Evaluation (World Bank)DOTS
Directly observed treatment strategyEBRD
European Bank for Reconstruction and DevelopmentECLAC
United Nations Economic Commission for Latin AmericaEFA
Education For AllEFF
Extended Fund Facility (IMF)EPA
Economic Partnership AgreementEU
Foreign direct investmentFSAP
Financial Sector Assessment Program (IMF)FSO
Fund for Special Operations (Inter-American Development Bank)FTI
Fast Track Initiative (Education For All)GAO
U.S. General Accounting OfficeGATS
General Agreement on Trade in ServicesGAVI
Global Alliance for Vaccination and ImmunizationGFATM
Global Fund to Fight AIDS, Tuberculosis, and MalariaGNI
Gross national incomeHIPC
Heavily indebted poor countryHIV
Human immunodeficiency virusIBRD
International Bank for Reconstruction and Development (World Bank)ICRG
International Country Risk GuideIDA
International Development Association (World Bank)IDB
Inter-American Development BankIEO
Independent Evaluation Office (IMF)IFC
International Finance Corporation (World Bank)IFF
International Finance FacilityIFFIm
International Finance Facility for ImmunizationIFI
International financial institutionIMF
International Monetary FundLDC
Least developed countryLICUS
Low-income countries under stressMAP
Multi-country AIDS Program (World Bank)MCA
Millennium Challenge AccountMDB
Multilateral development bankMDG
Millennium Development GoalMFN
Most favored nationMIF
Multilateral Investment Fund (Inter-American Development Bank)MIGA
Multilateral Investment Guarantee Agency (World Bank)MTEF
Medium-term expenditure frameworkNAFTA
North American Free Trade AgreementNEPAD
New Partnership for Africa’s DevelopmentNGO
New Lending Framework (Inter-American Development Bank)ODA
Official development assistanceOECD
Organisation for Economic Co-operation and DevelopmentOED
Operations Evaluation Department (World Bank)OLS
Ordinary least squaresOTRI
Overall trade restrictiveness indexOVE
Office of Evaluation and Oversight (Inter-American Development Bank)PAHO
Pan-American Health OrganizationPARIS21
Partnership in Statistics for Development in the 21st CenturyPEFA
Public Expenditure and Financial Accountability programPEPFAR
U.S. President’s Emergency Plan for AIDS ReliefPETS
Public Expenditure Tracking Survey (World Bank)PRGF
Poverty Reduction and Growth Facility (IMF)PRS
Poverty Reduction StrategyPRSC
Poverty Reduction Support Credit (World Bank)PRSP
Poverty Reduction Strategy PaperPSIA
Poverty and Social Impact Analysis (IMF)QAG
Quality Assurance Group (World Bank)ROSC
Report on the Observance of Standards and CodesSDR
Special Drawing Right (IMF)SPA
Strategic Partnership for AfricaSWAp
Trade Analysis and Information System (UNCTAD)UN
Joint United Nations Programme on HIV/AIDSUNCTAD
United Nations Conference on Trade and DevelopmentUNDP
United Nations Development ProgrammeUNECA
United Nations Economic Commission for AfricaUNESCO
United Nations Educational, Scientific, and Cultural OrganizationUNICEF
United Nations Children’s FundVAT
Value added taxWHO
World Health OrganizationWP-EFF
Working Party on Aid Effectiveness and Donor PracticesWTO
World Trade Organization
Bold actions are urgently needed if the development vision that world leaders laid out in remarkable unison at the turn of the century is to be realized. The Millennium Development Goals (MDGs) and the Monterrey Consensus have created a powerful global compact for development. The MDGs set clear targets for eradicating poverty and related human deprivations. The Monterrey Consensus stresses the mutual accountability of developing and developed countries in achieving these goals. But the continued credibility of this compact hinges on expediting its implementation. Nearly five years have passed since the Millennium Declaration was adopted, and current stocktaking of progress during that time has focused global attention on the need to scale up action—making 2005 a crucial year to build momentum for the MDGs.
Without faster progress, the MDGs will be seriously jeopardized—especially in Sub-Saharan Africa, which is off track on all the goals. At stake are prospects not only for hundreds of millions of people to escape poverty, disease, and illiteracy, but also prospects for long-term global security and peace—objectives intimately linked to development. Behind cold statistics on the MDGs are real people, and lack of progress has immediate and tragic consequences. Every week in the developing world, 200,000 children under five die of disease and 10,000 women die giving birth. In Sub-Saharan Africa alone, 2 million people will die of AIDS this year. And as many as 115 million children in developing countries are not in school. The need to scale up and speed up action is thus urgent, and the opportunities presented by the year 2005 must be seized.
To be sure, there has been progress. Developing countries have continued to improve their policies and governance, which has contributed to an encouraging acceleration in their economic growth. Even Sub-Saharan Africa may be turning the corner, with several countries in the region showing notable progress in reforming policies and reviving growth. Developed countries have increased aid and introduced actions to make it more effective. Some initial steps have also been taken toward trade policy reform. But, overall, progress has been slower than envisaged, uneven across policy areas and countries, and far short of what is needed to achieve the MDGs.
With just a decade to go until 2015, achieving the MDGs seems daunting, especially in Sub-Saharan Africa. But rapid progress is possible—if there is sufficient commitment to reform and sufficient support from development partners. Better-performing developing countries provide reasons for hope for others. Even in many lagging countries, including in Sub-Saharan Africa, advances are being made and the ground is being laid for better performance. What is needed is to quicken and broaden this progress, based on the framework of the enhanced global partnership envisaged at Monterrey.
How to generate momentum and broaden progress? Developing countries must take the lead in articulating and implementing strategies that aim higher—to rise above current trends and substantially accelerate progress. Deeper improvements are needed in policies and governance, to expedite economic growth and scale up human development and related key services. Developed countries must also step up implementation of their part of the development compact. They must provide more and better aid but also show leadership on trade policy reform that would open markets for developing country exports and give greater coherence to their policies in terms of their impact on development.
A Five-Point Agenda
To build the momentum needed to achieve the MDGs, this report proposes a five-point agenda of accelerated and concerted actions by developing and developed countries—based on the Monterrey framework of mutual accountability. Within this agenda, special focus must be given to accelerating progress in Sub-Saharan Africa, the region that is furthest from the development goals but that has recently demonstrated a capacity for improvement in economic performance—capacity that must be fostered through further domestic reform and stronger support from development partners.
Anchor Actions to Achieve the MDGs in Country-Led Development Strategies
For coherence and effectiveness, the scaling up of development efforts at the country level must be guided by country-owned and -led poverty reduction strategies (PRSs) or equivalent national development strategies. Framed against a long-term development vision, these strategies should set medium-term targets—tailored to country circumstances—for progress toward the MDGs and related development outcomes. And they should define clear national plans and priorities for achieving those targets, linking policy agendas to medium-term fiscal frameworks. Donors should use these strategies as the basis for aligning and harmonizing assistance.
Improve the Environment for Stronger, Private Sector–Led Economic Growth
Promotion of economic growth must be at the center of the strategy to achieve the MDGs. Sub-Saharan Africa needs to almost double its growth rate, to an annual average of about 7 percent over the next decade.
Progress in macroeconomic management should be deepened, with a focus on fiscal management and the structure of public spending—to create more fiscal space for priority expenditures while ensuring fiscal sustainability.
Improving the enabling climate for private activity—by removing regulatory and institutional constraints and strengthening infrastructure—is key. An important area of reform in many countries is the strengthening of property rights and the rule of law, including legal and judicial reform. Countries should use the improved diagnostics and metrics of the private business environment now available (such as the World Bank’s Doing Business Indicators and Investment Climate Surveys) to guide action and monitor progress. Spending on infrastructure, for both investment and operation and maintenance, needs to rise in all regions but must double in Sub-Saharan Africa—from about 4.7 percent of GDP in recent years to more than 9 percent over the next decade—as gaps in infrastructure are especially severe in that region. Across countries, the pace of the increase in investment will depend on institutional capacity and macroeconomic conditions.
Overarching this agenda is the need to improve governance—upgrading public sector management, controlling corruption—as doing so is crucial to both the private sector’s business environment and the public sector’s development interventions. The New Partnership for Africa’s Development and its African Peer Review Mechanism are promising African-led initiatives with a focus on strengthening institutions. Member countries should take advantage of the impetus they provide to develop and implement national capacity building strategies, which donors should support. Developed countries can also help curb corruption by demanding high standards from their companies active in developing countries, including by giving high-level political endorsement to the Extractive Industries Transparency Initiative.
Scale Up Human Development Services
The human development MDGs require a major scaling up of education and health services—primary education, basic health care and control of major diseases such as HIV/AIDS, and women’s access to education and health care—and of water and sanitation infrastructure, which is closely linked to health outcomes. Again, the shortfalls are most serious, and the need to scale up most urgent, in Sub-Saharan Africa.
Critical to effective scaling up are: rapidly increasing the supply of skilled service providers (health workers, teachers); providing increased, flexible, and predictable financing for these recurrent cost-intensive services; and managing the service delivery chain to ensure that money produces results.
To strengthen the Education for All Fast Track Initiative, partners should make monitorable, public, long-term commitments to significant annual increases in funding for primary education. Still larger additional resources are needed to achieve the health MDGs. It is important to ensure that global programs organized around specific health interventions are aligned with recipient countries’ priorities and support—rather than undermine—the coherence of their health sector strategies and systems.
Dismantle Barriers to Trade
The international community must aim for an ambitious outcome to the Doha Round that fully realizes its development promise, including in particular a major reform of agricultural trade policies in developed countries. The round should be completed by 2006.
“Aid for trade” should be scaled up substantially to help poor countries address behind-the-border constraints to their trade capacity, including through investments in critical trade-related infrastructure.
Substantially Increase the Level and Effectiveness of Aid
Official development assistance (ODA) must at least double in the next five years to support the MDGs, particularly in low-income countries and Sub-Saharan Africa, with the pace of the increase aligned with recipients’ absorptive capacity. To signal that needed resources will be forthcoming, 2005 is an opportune time for donors to raise their initial post-Monterrey commitments and extend them over a longer time horizon—2010 or beyond. Also, exploration should continue on the merits and feasibility of innovative financing mechanisms to complement increased aid flows and commitments.
Equally important is improving the quality of aid, with faster progress on alignment and harmonization, and delivery modalities that increase aid flexibility and predictability. Firm implementation of the Paris Declaration on Aid Effectiveness is central to this agenda.
Closure should be reached in 2005 on current proposals for additional debt relief for poor countries with heavy debt burdens that are pursuing credible reforms. Any additional debt relief should not cut into the provision of needed new financing—which for these countries should be primarily in the form of grants—and should not undermine the financial viability of international financial institutions.
Role of International Financial Institutions
How should international financial institutions—multilateral development banks and the International Monetary Fund (IMF)—strengthen and sharpen their support for this agenda? This report emphasizes action in five areas, as outlined below. In each of these areas there has been progress, but there is a need to do more and pick up the pace. The priorities for action and monitoring progress are:
Support the deepening of the PRS framework in low-income countries, and the operationalization of the MDGs and alignment of assistance within that framework. For low-income countries under stress, support to building institutional capacities is especially important.
Continue to adapt approaches and instruments to better respond to the evolving and differentiated needs of middle-income countries, including further streamlining of conditionality and investment lending.
Ensure that the implications of dismantling trade barriers and increasing the scale and effectiveness of aid are adequately reflected in support for country capacity building, so that emerging opportunities can be fully utilized. International financial institutions should sharpen the strategic focus and improve the effectiveness of their support for global and regional public goods.
Strengthen partnerships and harmonize further by improving transparency, reducing red tape and enhancing the flexibility of assistance (through simplification and use of sectorwide approaches), and promoting the development and use of country systems—for procurement, financial management, and environmental assessment.
Strengthen the focus on results and accountability by supporting country efforts to manage for development results—strengthening public sector management and development statistics—and furthering progress within international financial institutions in enhancing the results orientation of their country strategies and quality assurance processes. Adopt a common framework for self-evaluation of multilateral development banks’ performance and results measurement, and adapt to IMF operations as much as possible.
Millennium Development Goals (MDGs)
|GOAL 1||ERADICATE EXTREME POVERTY AND HUNGER|
|TARGET 1||Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day|
|TARGET 2||Halve, between 1990 and 2015, the proportion of people who suffer from hunger|
|GOAL 2||ACHIEVE UNIVERSAL PRIMARY EDUCATION|
|TARGET 3||Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling|
|GOAL 3||PROMOTE GENDER EQUALITY AND EMPOWER WOMEN|
|TARGET 4||Eliminate gender disparity in primary and secondary education, preferably by 2005, and at all levels of education no later than 2015|
|GOAL 4||REDUCE CHILD MORTALITY|
|TARGET 5||Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate|
|GOAL 5||IMPROVE MATERNAL HEALTH|
|TARGET 6||Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio|
|GOAL 6||COMBAT HIV/AIDS, MALARIA, AND OTHER DISEASES|
|TARGET 7||Have halted by 2015 and begun to reverse the spread of HIV/AIDS|
|TARGET 8||Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases|
|GOAL 7||ENSURE ENVIRONMENTAL SUSTAINABILITY|
|TARGET 9||Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources|
|TARGET 10||Halve by 2015 the proportion of people without sustainable access to safe drinking water and basic sanitation|
|TARGET 11||Have achieved a significant improvement by 2020 in the lives of at least 100 million slum dwellers|
|GOAL 8||DEVELOP A GLOBAL PARTNERSHIP FOR DEVELOPMENT|
|TARGET 12||Develop further an open, rule-based, predictable, nondiscriminatory trading and financial system (including a commitment to good governance, development, and poverty reduction, nationally and internationally)|
|TARGET 13||Address the special needs of the least developed countries (including tariff- and quota-free access for exports of the least developed countries; enhanced debt relief for heavily indebted poor countries and cancellation of official bilateral debt; and more generous official development assistance for countries committed to reducing poverty)|
|TARGET 14||Address the special needs of landlocked countries and small island developing states (through the Programme of Action for the Sustainable Development of Small Island Developing States and the outcome of the 22nd special session of the General Assembly)|
|TARGET 15||Deal comprehensively with the debt problems of developing countries through national and international measures to make debt sustainable in the long term|
|TARGET 16||In cooperation with developing countries, develop and implement strategies for decent and productive work for youth|
|TARGET 17||In cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries|
|TARGET 18||In cooperation with the private sector, make available the benefits of new technologies, especially information and communication|