NCPA - National Center for Policy Analysis

Will A New Strategy Help Poor Countries -- For A Change?

July 23, 2001

Many low-income countries are developing poverty reduction strategy papers (PRSPs) in order to qualify for further low interest loans from the World Bank and International Monetary Fund. The PRSPs are required by a new strategy by the international government lending institutions introduced two years ago, after the failure of the old strategy, called structural adjustment programs (SAP).

SAPs required currency devaluation and cutting public spending, coupled with structural reforms such as privatization of state-owned industries and trade liberalization. It has been blamed for rising food prices, closed schools and massive lay offs, and for delivering the final blow to health systems in poor countries.

  • For example, rising food prices following a 1994 currency devaluation required by an SAP increased malnutrition among young children and mothers in the Congo.
  • In Tanzania, spending on health and education fell by 40 percent in five years, and user fees prevented poor people in rural areas and pregnant women from accessing health care, even though they were supposedly exempt.
  • Despite the threat of AIDS, attendance at sexually transmitted disease clinics in Kenya fell by up to 60 percent after user fees were introduced on the advice of the World Bank.
  • A recent World Bank study shows that economic growth under International Monetary Fund programs has been close to zero and that the poor are benefiting least from any economic growth that is occurring.

Poverty reduction strategies instead offer good intentions such as "national ownership" and "a focus on poverty." They are therefore crucial to the future of 78 developing countries where poverty is by far the most important cause of ill health. According to Oxfam, 3.4 million children under five die in the highly indebted poor countries each year from easily preventable diseases.

Source: Ellen Verheuland (Wemos Foundation) and Mike Rowson (Medact), "Poverty reduction strategy papers," Editorials, British Medical Journal, July 21, 2001.

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