Reflecting its concern with the social implications of economic reform, as well as with the quality of macroeconomic adjustment and reform, the IMF held a conference in June 1998 on economic policy and equity that brought together academics, senior policymakers, labor representatives, and religious leaders. The IMF is concerned with the equity considerations in the programs it supports to give all members of society the opportunity to share in the benefits of economic growth and because economic reform programs that are equitable are more likely to be successful over the long run.
For a number of years, the IMF has helped countries incorporate social safety nets into their IMF-supported programs and curb unproductive expenditure, such as excessive military expenditure. The IMF has also encouraged countries to increase their public expenditure on basic needs, such as health care and primary education. Increasingly, the IMF is emphasizing “second-generation” reforms—such as strengthening the rule of law, dismantling monopolies, and reforming labor markets—so that the benefits of growth are widely distributed. In collaboration with the World Bank, the IMF staff has studied poverty and income distribution in specific countries, with the idea of integrating the findings into the IMF’s policy advice. The staff is improving the collection of data on social expenditure in member countries, and the findings of the external evaluation of the social aspects of ESAF programs are being incorporated into the IMF’s operational work.
A number of ideas were put forward during the conference that the IMF could take into consideration in its operational work to promote income equity in the context of its macroeconomic mandate.
- Sound macroeconomic policies are necessary to promote equity over the medium and long term. The pursuit of equity need not hamper economic growth and may actually reinforce it.
- Equity is a multidimensional concept that includes equitable distribution of opportunity, wealth, productive assets, and consumption, as well as availability of employment opportunities.
- Policymakers should focus on improving the prospects of the least fortunate by reducing poverty and social exclusion through improved access to education, health services, credit, and justice. Social safety nets are essential to protect the most vulnerable members of society.
- Governments should strive to improve public services to enhance equity and build wider ownership of, and support for, reforms.
- Debt forgiveness would give heavily indebted poor countries more resources for education, health, and infrastructure.
- Governments should involve civil society in the design and implementation of policies that improve equity. Communication should be improved, for example, within government, between ministries, and between the IMF, the World Bank, and other international institutions.
- The IMF should continue to address equity issues when it conducts its core activities.
The proceedings of the conference have been published by the IMF. Copies of the volume, Economic Policy and Equity, edited by Vito Tanzi, Ke-young Chu, and Sanjeev Gupta, are available for $27 each from IMF Publication Services, Box XS900, IMF, Washington, DC 20431, U.S.A. Telephone: (202) 623-7430; fax: (202) 623-7201; e-mail: firstname.lastname@example.org.