The IMF and the Poor
Summary and Conclusions
The focus of the IMF's policy advice is to help member countries achieve a
sustainable macroeconomic framework that creates the conditions for growth
and the reduction of poverty. The aim is to devise macroeconomic polices
that foster sustainable growth while reforming expenditures and tax
policies to reinforce this process, thus ultimately improving income
distribution and reducing poverty. Through this process, the IMF's approach
to fiscal policy, particularly its social aspects, has evolved so that it
is no longer viewed solely as a macroeconomic tool. The IMF is paying more
attention to the distributional implications of fiscal policy and its role
in fostering long-term growth, particularly during adjustment.
Nevertheless, further research is needed on the linkages between social
expenditures and social output indicators, with a view to providing
guidance for better targeting of social expenditures.
Through the programs it supports, the IMF is continuing its efforts to
better protect the poor. Guidelines have recently been issued to IMF staff
for improving the monitoring of social expenditures and social output
indicators as a further step in this process. IMF-supported programs can be
made more effective, in general, if the analysis of the distributive
effects of policy measures and economic developments is improved. They can
also be strengthened through a more systematic evaluation of the
effectiveness of social safety nets and of the composition of expenditures.
With the increased emphasis on second-generation reforms to foster
high-quality growth––such as the reform of the labor market––there is likely
to be an even greater impact on the poor than in the past, which
underscores the need for more work in this area. The IMF Board has recently
received an assessment by external evaluators of the social aspects of
adjustment programs in low-income countries. This will further guide the
IMF's policy advice and cooperation with the World Bank on poverty
reduction.
