Local view for "http://purl.org/linkedpolitics/eu/plenary/2004-04-20-Speech-2-404"
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"en.20040420.17.2-404"2
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".
In compliance with Articles 67 and 61(2) of the Cotonou Agreement, the Commission only provides general budget support for poverty reduction in low-income ACP countries when the beneficiary country implements a macroeconomic reform programme that is supported by one of the major international donors. In practice, this requirement is usually linked to the existence of a national reform programme which is subject to support through the International Monetary Fund's Poverty Reduction and Growth Facility. The PRGF is designed to contribute to the reduction of poverty and the creation of economic growth.
Such a country being 'on-track' with the IMF's conditions is generally considered as one of the general conditions for EC budget support. Disbursement of one annual 'fixed tranche' is usually preconditioned by a satisfactory periodic PRGF review of the ongoing reform programme. During such a review IMF staff examine whether agreed benchmarks and other performance criteria have been respected by the government over a given period of time.
Since the Commission entrusts the periodic review of macroeconomic performance to the institution that is best equipped and holds a natural assignment to do so, it is important that close coordination between Commission services – especially the delegations – and IMF staff is ensured. In case of diverging opinions on particular issues related to this review, Commission services and IMF staff must enter into a technical dialogue to try to reach a common position – I say a technical dialogue, but politics is also involved, of course.
Should the Commission maintain a position different from the IMF's, it may decide to disburse its budget support, despite the fact that the PRGF review may not be conclusive or that the country in other words goes 'off-track'. However, such a decision will only be taken in exceptional cases, for instance when the Commission is convinced that the IMF assessment is clearly too restrictive – or based on relatively minor elements of the reform programme – and that non-disbursement of budget support may jeopardise the government's poverty reduction efforts. In other words, despite linking part of its budget support disbursement directly to these PRGF reviews conducted by the IMF, the Commission takes its own case-by-case decision on whether to carry out a disbursement.
A similar approach is followed in relation to Community assistance to countries in other regions where general budget support for poverty reduction is linked to the same type of PRGFs.
In general, we are satisfied that this cooperation also includes the World Bank. We are not totally enslaved into this. It is a partnership and in recent years a more balanced, two-way, equal basis for these discussions has emerged. Today this partnership works. History has also proved that for the many formerly very badly managed economies in the Third World, a lot of progress has been achieved, despite the costs involved."@en1
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