International Monetary Fund. External Relations Dept.
Enduringpoverty and conflict are so stark in Africa that it is sometimes difficult to see what else is happening.
In April 2011, a study published by the Columbia Journalism Review titled “Hiding the Real Africa” documented how easily Africa makes news headlines in the West when a major famine, pandemic, or violent crisis breaks. But less attention is given to positive trends and underlying successes.
In many cases, despite accelerated economic growth over the past 10 years, the rise of a middle class of consumers, and a more dynamic private sector
Development Conference in Mexico—which “reaffirmed that sound economic policies and institutions, together with strong, broad-ranging international support, are the twin pillars on which to build enduringpoverty reduction.” It also welcomed the outcome of the recent reviews of the IMF’s concessional loan facility for low-income countries (Poverty Reduction and Growth Facility) and the poverty reduction strategy paper (PRSP) approach. It said the PRSP process—which stresses country ownership of reforms—”should continue to be nurtured as the suitable framework for fostering
Valerie Cerra,, Meenakshi Rishi,, and Sweta C. Saxena,
, and Instability,” explores the complex relationships between capital flight and foreign aid, and between capital flight and debt. It argues that bolstering the macroeconomic policy environment and strengthening institutions can help stop and prevent capital flight.
The causes of underdevelopment are myriad and controversial. Enduringpoverty and low growth are often blamed on poor macroeconomic and structural policies. Some economists attribute low levels of development to such factors as a high incidence of disease, low agricultural productivity, and high
in the previous year, but recovered to 0.23 percent in 2002. To support the implementation of sound economic policies and institutional reform thereby achieving enduringpoverty reduction in low-income countries, several bilateral donors have announced initiatives to raise ODA in the years ahead. For example, European Union (EU) members have committed themselves to raise their collective ODA to 0.39 percent of GNI by 2006, and the United States has announced plans for a 5 billion increase in its core development assistance by 2006, an increase of close to 50
International Monetary Fund. External Relations Dept.
incorporate comprehensive restructuring clauses in debt instruments. The committee looks forward to reviewing progress in this area at its next meeting.
IMF’s role in low-income countries
The committee fully endorses the Monterrey Consensus, which has reaffirmed that sound economic policies and institutions, together with strong, broad-ranging international support, are the twin pillars on which to build enduringpoverty reduction. It encourages the IMF to work closely with the UN, the World Bank, the regional development banks, and bilateral donors in developing a
, the safety nets for survivors of the 1994 genocide, the elections for local government, work on a new constitution, and the training of judges.
Directors stressed, equally, that sustained growth and enduringpoverty reduction depend crucially on a just and durable security settlement in Rwanda and more widely in the Great Lakes region. Only in that setting can critically-needed advances in regional economic integration be realized, and domestic resources in Rwanda be freed for productive use. Directors therefore urged the authorities to pursue peace relentlessly
continue to play an important role in protecting the domestic and financial systems.
11. The authorities have agreed to accept the obligations of Article VIII of the IMF’ Articles of Agreement and have received advice and technical assistance from the Fund to draft the new foreign exchange legislation, including the removal of the remaining exchange restrictions. This new foreign exchange legislation is scheduled for approval by the National Assembly in November 2005.
12. The authorities are aware that sustained economic growth and enduring
not necessarily imply causality; indeed, causality likely runs both ways: more investment, when it is of the right kind, may be conducive to faster growth, and rapid growth is, in turn, an incentive for private firms to invest in the future. Still, countries with poor investment environments and lower levels of private investment tend to experience mediocre growth, hence more enduringpoverty.
Private firms also contribute to development in other ways that are crucial to economic development and poverty reduction:
• In most developing countries, they generate a
—from 45 percent to slightly more than 70 percent in the past three decades.
The average world citizen is richer than ever thanks to the growth the global economy has enjoyed over the past 50 years. However, the benefits of this growth have not been equally distributed—the result is enduringpoverty and inequality.
One of the Millennium Development Goals the United Nations agreed to in 2000 was to reduce extreme poverty by half between 1990 and 2015. Although that goal was achieved five years ahead of schedule, extreme poverty remains widespread in a number of low
smoothly to more normal relationships with external creditors. These are essential conditions for securing the necessary financing for sustainable growth and development, and enduringpoverty reduction in these countries.
A country is considered to have achieved external debt sustainability when it is able to make good on all of its external debt service payments—current and future—in full and without sacrificing economic growth. That is, a country that has reduced its debt burden to sustainable levels should not have to resort to rescheduling its debt or accumulating