World Bank and IMF neglect poorest

Without the input of civil society, policy formulation does not lead to the most effective reduction of poverty.

Credit: WaterAid / Juthika Howlader

Despite it being a long-stated policy of The World Bank and the IMF to fully assess the impact of their advice on poor people, both institutions are failing to do so.

Several leading NGOs, including WaterAid, have put their names to a briefing note calling on the World Bank and the IMF to conduct poverty and social impact assessments of particular public policy reform choices.

Poverty and social impact assessments (PSIAs) ensure that policy formulation is led from the outset by numerous stakeholders, including; government, parliamentarians, civil society and donors and not just set by international finance institutions such as the World Bank and the IMF.

Opening up the debate beyond these institutions ensures national policies are more likely to be informed, country-led and result in the more effective poverty reduction policies.

Currently, both institutions subscribe to PSIAs but, in reality, the process has rarely been followed.

WaterAid's Head of Policy, Henry Northover, says:  

"The idea is to produce assessments of the predicted impacts before choosing particular reform paths. It is particularly important that this issue is discussed now when the World Bank is negotiating new funds from donors. Donors must insist on these changes being implemented to ensure that their money is more likely to result in genuine, sustainable poverty reduction outcomes."

The briefing paper proposes how the World Bank and the IMF can generate widespread, transparent and informed national debates, crucial for the future success of policies. In particular, international financial institutions (IFIs) can assist this process in two key ways. They can:

• Stop attaching economic policy conditions to their aid, and instead align their lending with country-owned national policies;

• Provide funding for developing countries to undertake and participate in full poverty impact assessments on a range of alternative policy reforms and projects, and help encourage more inclusive policy-making.

Find out more, download the full briefing note ( PDF 208Kb)