26 April 2004
Report on CIS-7 Poverty Reduction Initiative Released
Initiative aims for economic growth in seven countries
Four international financial institutions (IFIs) released April 26 an
overview of economic trends and developments in the seven low-income
countries in the Commonwealth of Independent States (CIS) that are the focus
of the CIS-7 poverty reduction and economic growth initiative — Armenia,
Azerbaijan, Georgia, Kyrgyz Republic, Moldova, Uzbekistan, and Tajikistan.
“The primary objective of the CIS-7 Initiative was to revitalize the
partnership between the countries and the international community, as well
as among the countries themselves, to achieve faster economic growth and
poverty reduction,” said an International Monetary Fund (IMF) press release.
A ministerial meeting in April 2002 in Washington formally endorsed the
initiative.
The IFIs agreed “to assess the continued relevance of the Initiative” in the
seven countries “compared with alternative cooperation mechanisms.”
In addition to the IMF, other institutions involved in the CIS-7 Initiative
are the World Bank, the European Bank for Reconstruction and Development
(EBRD), and the Asian Development Bank (AsDB).
The full report is available at:
Following is the IMF press release on the report:
International Monetary Fund
Washington, D.C.
April 26, 2004
IMF, WORLD BANK, EBRD AND ASDB RELEASE REPORT
ON CIS-7 INITIATIVE
The International Monetary Fund (IMF), the World Bank, the European Bank for
Reconstruction and Development (EBRD), and the Asian Development Bank (AsDB)
are releasing a joint review of recent trends and developments in the seven
low-income countries in the Commonwealth of Independent States (CIS). The
report
() focuses on growth and
poverty, debt and fiscal sustainability, governance and the business
climate, and regional cooperation. It also describes donor activities in
support of reforms in these areas. This report pulls together the results of
three years of work under the CIS-7 Initiative, as outlined below.
In early 2001, the staffs of the IMF and World Bank, in consultation with
the AsDB and EBRD, issued a report on the external debt and fiscal
sustainability situations in CIS countries eligible for concessional funding
from the World Bank’s International Development Association (IDA). The
report examined the causes and consequences of the large external debt
incurred by Armenia, Georgia, the Kyrgyz Republic, Moldova and Tajikistan
since 1991 and concluded that they faced a difficult fiscal and external
outlook in the coming decade. While massive external shocks and inadequate
policy responses, combined with an overestimation of debt carrying capacity
by lenders (including IFIs), had contributed to this situation, corruption
and poor governance, lack of policy ownership, and weak implementation
capacity had exacerbated the problem. The report urged a strengthening of
adjustment and reform efforts, coupled with increased concessional
assistance and debt relief. The report attracted considerable interest from
the international community and led to calls for a broader examination of
the transition challenges facing these countries.
A second report in 2002 on poverty reduction, growth, and debt
sustainability in the low-income CIS countries featured a widening of the
analysis and added two IDA-eligible countries — Azerbaijan and Uzbekistan.
This report was considered at a conference in London in February 2002, which
recommended the launch of a special time-bound initiative for the seven
countries.
The primary objective of the CIS-7 Initiative was to revitalize the
partnership between the countries and the international community, as well
as among the countries themselves, to achieve faster economic growth and
poverty reduction. Specific efforts were aimed at raising awareness about
the countries’ plight; improving donor coordination; increasing knowledge
services and delivery; building capacity; and promoting regional
cooperation. A ministerial meeting in April 2002 in Washington. formally
endorsed the Initiative.
A large body of analytical work was commissioned in 2002 focusing on the
transition experience and challenges facing the CIS-7 and the role of the
international community. This work, which was discussed at a second
conference held in Lucerne in February 2003, included wider participation of
countries and institutions, including international and CIS-7 non-government
organizations and academics. Since then a number of topical seminars in the
region have sought to foster capacity-building in key areas, including
participatory approaches to poverty reduction strategies; public expenditure
management; reforms in the energy sector; and in health, education and labor
markets; financial sector supervision; public debt management; and regional
public goods. Participants at the conference noted the increasingly
divergent performance of the CIS-7 countries, the growing importance of
other fora dealing with the agenda, and the difficulties in addressing
entrenched country and regional issues in the CIS-7 format. They agreed that
it would be useful to review the situation in 2004 to assess the continued
relevance of the Initiative compared to alternative cooperation mechanisms.
The four IFIs have recently completed such a review in consultation with the
CIS-7 governments, which is summarized in the report being issued.
Since the launch of the Initiative, donor awareness and coordination for the
benefit of the countries have become demonstrably stronger. Donors have
responded in some cases with debt rescheduling and more concessional
assistance, and supported a growing range of activities in knowledge
creation, cross-country dissemination, and capacity building. With
cooperation increasingly being focused at the sub-regional level and the
growing divergence in policies and performance across the CIS-7, several of
the countries would like to move beyond the Initiative. The IFIs will
continue to work with these countries to define new modalities of
cooperation on specific issues, involving sub-regional vehicles as
appropriate. Sub-regional efforts show signs of promise in Central Asia,
while Moldova is being drawn into the EU’s Wider Europe Initiative. Clearly,
the South Caucasus would benefit considerably from improved economic
relations among the three countries, and the international community is
expected to focus much more on fostering such relations.
There is considerable potential for enhancing the development prospects of
the CIS-7 through the Poverty Reduction Strategy process. For the countries
themselves, better progress is needed to define priorities and link them
closely with their budgets, while donors are expected to insist that their
assistance be framed within the context of country poverty reduction
strategies. Levels of assistance should be consistent with commitments made
with respect to attainment of the Millennium Development Goals in these
countries.
(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: )
From: Emil Lazarian | Ararat NewsPress
