Press Release No. 05/83

Press Release: New IMF-World Bank Report Calls for Urgent Action to Cut Global Poverty and Win Better Development Results for Poor Countries

April 12, 2005

Bold and urgent action is needed to reduce extreme poverty and improve people's economic and social prospects in developing countries in keeping with a set of key development targets, called the Millennium Development Goals (MDGs), says a report released today by the World Bank and International Monetary Fund.

"The credibility of the entire development community is at stake as never before," said World Bank President, James Wolfensohn in introducing the second annual Global Monitoring Report: MDGs: From Consensus to Momentum." Rich countries must now deliver on the promises they have made in terms of aid, trade and debt relief, and the developing countries—especially in Sub-Saharan Africa—need to aim higher and do better in terms of their own policies and governance and to make more effective use of aid."

The 2005 Global Monitoring Report is part of a five-year stocktaking effort to monitor progress towards achieving the Millennium Development Goals by 2015. More than 180 world leaders agreed unanimously to the development goals at the UN Millennial Summit in New York in September, 2000. The report will be discussed by finance ministers, central bankers, and development ministers in Washington at the spring meetings of the World Bank and IMF. It will also serve as an important input into the upcoming G8 heads of state meeting to be held in the UK in July and the UN Summit on the MDGs in September.

With just a decade left to go, progress toward the MDGs has been slower and more uneven across regions than originally envisaged, with Sub-Saharan Africa falling far short. In calling for stepped-up action, the new report points to opportunities created by recently improved economic performance in many developing countries. It outlines a five-point agenda designed to accelerate progress:

· Ensure that development efforts are country-owned. Scale up development impact through country-owned and led poverty reduction strategies;

· Improve the environment for private sector-led economic growth. Strengthen fiscal management and governance, ease the business environment, and invest in infrastructure;

· Scale up delivery of basic human services. Rapidly increase the supply of health care workers and teachers, provide larger and more flexible and predictable financing for these recurrent cost-intensive services, and strengthen institutional capacity;

· Dismantle barriers to trade. Through an ambitious Doha Round, including major reform of agricultural trade policies—and also increasing "aid for trade";

· Double development aid in the next five years. In addition, improve the quality of aid, with faster progress on aid coordination and harmonization.

"To achieve the goal of cutting poverty in half by 2015, Sub-Saharan Africa needs to substantially raise annual GDP growth rates—to approximately 7 percent over the next decade, roughly double the region's current growth rate," said Anne O. Krueger, the IMF's First Deputy Managing Director. "While the domestic agenda necessary for such a take-off is clearly country-specific, the broad priorities are sound macroeconomic management, an enabling climate for private sector led growth, and strong public sector governance."

Over the last five years, many countries have shown improvement in economic policies and governance. Surging world trade and dramatic reductions of poverty in some countries provide grounds for hope in others. China's growth between 1981 and 2001 has reduced the proportion of extremely poor from 40 percent to 21 percent of the population—400 million people. Vietnam reduced extreme poverty from 51 percent in 1990 to 14 percent in 2002. The goal to halve poverty by 2015 will likely be met at the global level, but not in Sub-Saharan Africa unless progress there can be accelerated quickly.

But conditions for achieving better economic performance in Sub-Saharan Africa are improving: 12 African countries are currently experiencing growth spurts above the trends for the region-with average GDP growth over the last decade of 5.5 percent or more.

Prospects for achieving the MDGs are gravest in health. As it looks now, most countries cannot meet the goals to reduce child and maternal mortality and achieve universal education. Substantial increases in the supply of teachers, doctors, nurses and community health workers are needed. Africa, for example, needs to triple its health workforce—adding one million—by 2015.

"Behind cold data on the MDGs are real people and lack of progress has real and tragic consequences," said the World Bank's Zia Qureshi, the report's lead author. "Every week, 200,000 children under five die of disease. Every week 10,000 women die giving birth. In Sub-Saharan Africa alone this year, 2 million people will die of AIDS. Worldwide, more than 100 million children in developing countries are not in school."

The report says that meeting the MDGs will require a doubling of the amount of official development assistance (ODA) reaching the poorest countries. Wolfensohn urged donors to use this year of stocktaking to raise their commitments and signal that support for the MDGs is forthcoming. "At stake are not just the prospects for hundreds of millions of people to escape poverty, hunger, and disease, but also prospects for long-term security and peace which are intrinsically tied to development," he said.

While aid volumes have risen since the UN Financing for Development Conference in Monterrey in 2002, when donors pledged to significantly increase assistance to the poorest countries, debt relief and technical cooperation account for a full two-thirds of the increase. The need for aid is especially acute in Sub-Saharan Africa. Given reforms underway, many countries in the region could effectively use a doubling of aid over the next five years.