Abstract

Following the Executive Board’s consideration of this and other papers, important changes were made to the ESAF to give the goal of poverty reduction greater prominence and improve its effectiveness as a policy instrument to favor growth and reduce poverty.

Following the Executive Board’s consideration of this and other papers, important changes were made to the ESAF to give the goal of poverty reduction greater prominence and improve its effectiveness as a policy instrument to favor growth and reduce poverty.

The key change is that the complementarity of macroeconomic, structural, and social policies will be given greater recognition. These policies will be articulated in a Poverty Reduction Strategy Paper (PRSP), which will integrate these policies in a mutually reinforcing manner. Many of the recommendations for strengtheniug the design and implementation of social policies, particularly in efficiency and targeting of public spending, will feed into the PRSP. Importantly, the PRSP prepared in collaboration with the IMF and World Bank will be nationally owned: the preparation will be government-led based on an open consultative process, including with civil society. The PRSP will also serve as the vehicle for strengthened IMF-World Bank collaboration. Reflecting these changes, the ESAF was renamed the Poverty Reduction and Growth Facility in November 1999.

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