Despite a two-year focus on reducing poverty in its client countries, the World Bank and International Monetary Fund (IMF) are sticking to economic prescriptions that may have increased poverty and joblessness in many nations and widened the gap between rich and poor, according to a number of grassroots development groups.
New efforts by the two agencies to involve civil society, as well as national governments, in designing their economic programs--called Poverty Reduction Strategy Papers (PRSPs)--are still excluding poor people, who are the intended beneficiaries, says a new report which summarizes findings by a number of recent regional and country reviews of the PRSP process.
"Large numbers of people--particularly those who live in hardship conditions and/or have been socially and politically marginalized for long periods of time--are alienated from decision-making processes that deeply affect their livelihood and future," according to the report, 'The World Bank and the PRSP: Flawed Thinking and Failed Experiences.'
The report--compiled jointly by debt relief group Jubilee South, Malaysia-based Focus on the Global South, African Women's Economic Policy Network, and the Centro de Estudios Internacionales in Managua, Nicaragua--concludes that the Bank and the IMF remain too wedded to traditional market-led models of economic development to meet their stated goal of cutting poverty.
"Programs are ultimately directed towards achieving the highest possible growth which is not necessarily the same as achieving the highest possible poverty reduction," the report finds.
Those conclusions echo other recent studies on the alleged failure of the new poverty focus of the two Washington-based agencies whose structural adjustment programs (or SAPs) have long been accused by development groups of hurting the poor.
Earlier this year, a report submitted to the United Nations Economic and Social Council by Fantu Cheru--an independent expert affiliated with the U.N. High Commission for Human Rights--found that the World Bank and the IMF "continue to prescribe the same medicine as a condition for debt relief, dismissing the overwhelming evidence that SAPs have increased poverty."
For more than 20 years, the World Bank and the IMF have provided loans to debt-plagued and cash-strapped poor countries in exchange for their implementation of far-reaching policies designed to encourage foreign investment and rapid economic growth.
Among other policies, SAPs have traditionally required countries to reduce tariffs and other import barriers, increase exports, reduce government budgets and subsidies, privatize state enterprises, and provide tax and other incentives for foreign investment.
Such policy prescriptions, however, generally hurt the interests of the poorest and most vulnerable sectors of the borrowing countries, according to critics.
In response, both the Bank and the IMF in the late 1990's dropped the rhetoric of structural adjustment and pledged to pay much greater attention to the needs of people living in impoverished countries, and to poor people themselves, in designing programs for development and debt relief.
"Nothing has changed," noted Doug Hellinger, a senior analyst at the Development Group for Alternative Policies in Washington which has led a four-year study with the Bank on the impact of SAPs. "It's the same structural adjustment process, and the participation [of civil society] is at best inadequate."
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