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p. 1 of 9 BACK | NEXT I. Background II. ADB's Poverty Reduction Strategy III. Rationale for the Cooperation Fund IV. Objectives and Scope V. Outputs VI. Activities to be Financed from the Fund VII. Implementation Arrangements VIII. Funding Arrangements IX. Recommendation

Formulation and Implementation of National Poverty Reduction Strategies

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I. Background

1. Close to 900 million of the world's poor (i.e., those who survive on less than $1 a day) live in the Asia and Pacific region. Nearly one in three Asians is poor. Although the proportion of people below the poverty line had been declining, the absolute number of poor people is still increasing, exacerbated by population growth. South Asia, one of the poorest subregions in the world, now has more than half a billion poor people, of whom 450 million are in India. The People's Republic of China has 225 million poor people. About 55 million more are in Southeast Asia, where in the wake of the Asian crisis, over 10 million have joined the ranks of the poor. Many people in the Central Asian republics have slipped into poverty with the economic disruptions of transition. The small island countries of the Pacific, despite the relatively higher per capita income of their populace, remain vulnerable because they are remote, prone to natural disasters, and have limited ability to deal with external economic shocks.

2. Recently, an international consensus has emerged, refocusing development assistance toward strategies aimed at poverty reduction. This resulted in the proposal of the International Monetary Fund (IMF) and World Bank to support the preparation of so-called poverty reduction strategy papers (PRSPs). PRSPs were originally associated with the highly indebted poor countries (HIPC)-initiative. In order to be eligible for debt relief under the HIPC-initiative, governments of these countries submitted a PRSP to the boards of directors of IMF and the International Bank for Reconstruction and Development (IBRD). In the process, it became widely recognized that the main elements of the PRSPs, (the importance of country ownership, participatory approaches to development, and output orientation in order to monitor progress toward poverty reduction) are also highly relevant for non-HIPC developing countries. The Asian Development Fund (ADF) donors reaffirmed and endorsed this view 1 . To avoid the fragmentation of development efforts, they agreed that it is paramount that all development partners working in developing member countries (DMCs) should support the development of a locally led poverty reduction strategy. In this context, donors recommended that the Asian Development Bank (ADB) participate fully in the process of formulating, revising, and implementing comprehensive national poverty reduction strategies (NPRS).

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