The IMF's Role in Low Income Asia - World Bank

Low-Income Countries in Asia and the Role of the IMF Wanda Tseng Deputy Director IMF Asia and Pacific Department September 14, 2006 Outline Recent performance of low-income PRGF countries in Asia Key policy challenges Role of the Fund 2 Low Income Countries in Asia Low income countries in Asia at a Glance 1/ Poverty $1 a day (percent Per capita GDP Population of Life expectancy (in U.S. dollar) (in millions) population) at birth (years) Low income Asia 3/

East Asia South Asia Pacific Islands ASEAN 4 and NIEs Sub-Saharan Africa 4/ Adult literacy, age Under five 15-24 mortality (percent of (per 1,000) population) UN Human Development Index 2/ 532 480 567 833 366 162 196

7 29.1 31.6 28.8 ... 65.7 66.3 65.5 57.8 60.7 55.7 64.4 81.3 90.7 92.7 87.7 65.3 0.61 0.66 0.57

0.56 9,436 477 6.9 72.8 21.7 97.7 0.80 768 683 45.8 47.2 159.3

62.8 0.46 Source: IMF, World Economic Outlook; World Bank, World Development Indicator. 1/ Regional averages are weighted by GDP valued at purchasing power parties. In case data for all sample economies are not available, averages are calculated using available sample economies. 2/ A composite index measuring achievements in three aspects of human development, longevity, knowledge, and a decent standard of living. The index ranges 0-100, with the higher value indicating better achievements. 3/ East Asia includes Cambodia, Lao PDR, Mongolia, Myanmar, Timor-Leste, and Vietnam; South Asia includes Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka; and Pacific Islands include Kiribati, Papua New Guinea, Samoa, Solomon Islands, Tonga, and Vanuatu. 4/ Excludes South Africa. 3 Growth performance has been generally encouraging..... Per Capita Real GDP Growth (2000-05 average; percent) 5 4 3

2 1 0 Total low income Asia Of which: East Asia Of which: South Asia Developing countries excluding China and India Source: IMF World Economic Outlook; and World Bank Global Monitoring Report 2006. 4 And the region as a whole have already met the MDG poverty goal. Poverty Headcount By Region 1/ Source: World Bank, Global Monitoring Report 2006. 1/ MDG goal on extreme poverty eradication: halve between 1990 and 2015, the proportion of people whose income is less than $1 a day. East Asia

and Pacific includes China, and South Asia includes India. 5 There are also encouraging signs of progress on human development indicators. Under five mortality rate (per 1,000 births) 1990 1995 2000 2004 44 145 133 87 131 30 102 100

65 101 23 80 80 52 83 Annual Percent Change 1990-2004 Selected Asian Countries: Vietnam Timor Leste Bhutan Mongolia Lao PDR 53 172 166 108 163

-5.8 -5.3 -5.1 -5.1 -4.7 Source: World Development Indicators 6 Some Caveats, however, ............ Gains in poverty reduction have not been always even Global environment could become less benign Suspension of the Doha Round trade talks is a set back Avian Flu pandemic

7 ... and a large development gap remains. Development gap Low income Asia 100 90 80 70 60 50 40 30 20 10 0 Per capita GDP 1/ ASEAN4 and NIEs Poverty $1 a

Under five Adult literacy UN Human day (percent mortality (per (percent of Development of population) 1,000) population) Index Sources: IMF World Economic Outlook; World Bank, World Development Indicators; and UN Human Development Index. 1/ Ratio to ASEAN4 and NIES (=100). 8 Key Policy Challenges Maintaining sound macroeconomic policies Developing human capital

Further growth and poverty reduction Building strong institutions 9 Case study I: Vietnam What was the issue? Support for the Doi-Moi reform program How did we help? Intensive support under IMF financial programs (19942004). Technical Assistance General policy advice 10 Case study II: Cambodia What was the issue? Strengthening public finances

How did we help? Technical Cooperation Action Program, designed jointly with the authorities and donors. 11 Case study III: Bangladesh What was the issue? Expiration of quotas under WTOs Multifiber Agreement How did we help? IMF lent Bangladesh $78 million under the Trade Integration Mechanism in April 2004. 12 Thank you 13