This concern about whether poverty levels could accurately be “measured” is
likely one reason that action was not taken sooner to address the increases in poverty and
inequality in the former Soviet states.
Measurement problems aside, this was irrefutable
evidence to many that a focus on social programs had once again been neglected by the
financial institutions. Both of these events, including the increased focus on the
institutions due to the realization that their policies could affect the lives of so many
people, (in these cases for the worse) can in part be attributed to the increased focus on
social policies at the Bank, and to a lesser degree, at the IMF. While some of these
changes were probably inevitable, many of the programs that focus on the societal
impacts of poverty reduction were also developed during James Wolfensohn’s tenure as
president of the World Bank. The following section will document the new programs
and policies undertaken by both institutions as a result of increases in poverty levels.
A Shift in the Focus on Poverty
In 1989, a joint World Bank/IMF publication titled, “Strengthening Efforts to Reduce
Poverty” addressed the worsening poverty situation in most of the developing countries
during the 1980s, which was exacerbated by slower economic growth due to the
recession. This publication explained that as a result, “the Bank (was) making its
practices in some areas more flexible and responsive to the needs of borrowers.”
While
this section still referred to loans and programs only with governments, this “flexibility”
is likely the beginning of a shift in Bank policy to be able to provide loans through
organizations to individuals. The IMF also developed two new facilities in the late 1980s
to assist the poor; the Structural Adjustment Facility (SAF) in March 1986, and the
Enhanced Structural Adjustment Facility (ESAF) in December 1987.
These facilities
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Convention