IMF Conference

A version of this piece appears in the August 7, 2006, issue of the IMF Survey:

Promises to keep: the United Kingdom outlines its development strategy

At the Group of Eight (G8) Summit at Gleneagles in 2005, ambitious commitments were made to reduce the debt of poor countries, deliver more and better aid, pursue fairer trade, encourage improved governance, and foster more coherent policies in support of development. Roughly one year later, at a July 20 IMF Economic Forum, Mark Lowcock of the U.K.'s Department for International Development (DFID), outlined (access the presentation) its newly launched policy statement Eliminating World Poverty: Making Governance Work for the Poor. The paper sets out how the United Kingdom intends to play its part in delivering on the promises made last year. Joining Lowcock to discuss the paper were Dennis de Tray (Center for Global Development), Abdoulaye Bio-Tchane (IMF), and Jim Adams (World Bank). (Access the full transcript, MP3 audio file and webcast).

The policy paper highlighted four areas that the United Kingdom sees as critical in the fight against poverty—good governance, growth and public services, climate change, and reform of the international system.

Good governance. From the U.K. perspective, Mark Lowcock noted, effective states and better governance (at the national and international levels) are essential for promoting growth and poverty reduction. To monitor governance and to inform the choices that the United Kingdom will make regarding the distribution of its aid resources, the country plans to adopt a new quality-of-governance assessment. But how, asked Andy Berg (IMF), will the United Kingdom resolve the tension between making aid available to countries on a predictable basis and withholding aid from poorly governed countries? Lowcock agreed this was indeed one of the most difficult challenges facing donors. The United Kingdom would not want to "punish the poor for the failings of their government," nor does it want to support regimes that govern poorly. Ultimately, Lowcock said, decisions will be made case by case, and DFID will look for ways to support basic services in problem cases.

Growth and public services. "Growth is the exit strategy for aid," stated Lowcock—a sentiment shared by Jim Adams. Too often, Adams noted, the importance of growth is lost in the discussions on aid. Many low-income countries, Lowcock noted, will be unable to increase their tax base fast enough by 2015 to finance the public services (e.g. schools, clinics, clean water) necessary to achieve the Millennium Development Goals (MDGs). These countries will need donor support, and the United Kingdom, Lowcock said, is prepared to do its part. De Tray cautioned, too, that many countries will remain dependent on aid for a long time to come—implying the need for a long-term engagement by DFID and other donors.

Climate change. Why should a paper focusing on poverty reduction take up the issue of combating global warming? The DFID paper makes a persuasive case for why climate change jeopardizes the development of poor countries, said Abdoulaye Bio Tchane (IMF). Desertification in the Sahel and the spread of malaria caused by long rainy seasons in parts of Africa have had devastating effects on the poor, he noted. Indeed, Lowcock warned, climate change is the most serious long-term threat to development and the achievement of the MDGs. Developing countries will need to be part of the solution and receive support to adapt.

International challenges, international solutions. In DFID's view, international institutions must also be reformed so that they can deliver better results for development and be more responsive to the needs of poor people. In particular, Lowcock said, developing countries must have a stronger say in the governance of institutions like the IMF and the World Bank. And the heads and top managers of these global institutions should be selected by transparent, competitive processes that are not driven by nationality or tradition.

Sustaining public support for aid

Development is a lengthy process that will require a resolute commitment to aid in donor countries. In the United Kingdom, Lowcock observed, the constituency for development has grown-one person in six was involved in some way in the "2005 Make Poverty History" campaign. Strong support for public spending on international development can be sustained, he said, but only if people see and believe that this use of their tax payments is making a difference. The challenge is to demonstrate that it is.