What is a Poverty Reduction Strategy Paper?

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  • Written By: Brendan McGuigan
  • Edited By: Bronwyn Harris
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  • Last Modified Date: 23 February 2020
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A poverty reduction strategy paper is a paper written up by a nation applying for a loan from the World Bank or International Monetary Fund (IMF), or a nation trying to get a lower interest rate on existing loans. The poverty reduction strategy paper can be seen as a sometimes-replacement for the structural adjustment program papers which in the past were the main vehicle for receiving a loan from the IMF or World Bank.

Whereas a structural adjustment program paper consists of a number of requirements for the nation, drafted by the IMF or World Bank, a poverty reduction strategy paper is designed by the borrowing nation with consultation from the IMF or World Bank. The idea behind the poverty reduction strategy paper is that it allows borrowing nations a great deal more say in their own future, helping them to retain sovereignty and allowing their populace to have input into future developments. One of the primary critiques of the IMF and World Bank through the 1990s was that it stripped a great deal of decision-making from borrowing nations, effectively blackmailing them into accepting sometimes harsh free-market conditions in exchange for much needed funding.


The poverty reduction strategy paper is basically an outline of what a country plans on doing to help build up its economy in order to both benefit the populace and make sure it can pay back its loans. A poverty reduction strategy paper is meant to be fairly comprehensive, addressing social programs, structural development, and macroeconomic policies the country plans on putting into place or refining to strengthen their economic outlook.

Structural adjustment program papers were created in response to the economic crises of the 1970s, when a number of countries were unable to pay back their loans. Wishing to avoid a repeat of that situation, the IMF and World Bank decided to outline strictly what a country needed to do to stay solvent, before they were allowed to borrow money. Although this was somewhat successful from a fiscal perspective, it drew a great deal of criticism from those who felt the IMF and World Bank’s structural adjustment programs often failed to take into consideration social issues or to look at the longer-term health of the national economy.

A poverty reduction strategy paper acts as a sort of middle path. Although the nation isn’t simply left to their own devices to do whatever they want, they also don’t have their path proscribed for them. The nation, with input from the IMF, World Bank, and other involved parties, comes up with a plan to build up their economy. The poverty reduction strategy paper is referenced regularly when the IMF and World Bank check in to see how the development strategy is going. Joint staff assessments are made, and things are adjusted accordingly.

As part of an overall campaign of heightened transparency within the IMF and World Bank, every nation’s poverty reduction strategy paper can be viewed online. In addition, the joint staff assessments are also available. This allows citizens of the country to see what amount to the terms of their national loans, and also lets interested outside parties keep tabs on the situation, keeping the IMF and World Bank much more accountable to the public than ever before.



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