Poverty reduction:

Global perspective

If you look long enough at a world map, a distinct pattern emerges on the lines of 'developed and developing' countries. Such is the disparity between the two, that it is two worlds for all intents and purposes. Generally, countries in the Northern Hemisphere are rich and prosperous, while those in the Southern Hemisphere, with the exception of Australia, New Zealand and perhaps South Africa, are poor.

This is a disparity that the world can do without. There should not be First Worlds and Third Worlds. But the unfortunate reality is that poverty is rampant in half of the world. The world is finally beginning to realise that urgent action is needed to reduce extreme poverty and improve people's economic and social prospects in developing countries.

In a recent report, the World Bank and the International Monetary Fund have called for urgent measures for reducing poverty in keeping with a set of key development targets called the Millennium Development Goals (MDGs). More than 180 world leaders agreed unanimously to the development goals at the UN Millennial Summit in New York in September, 2000. The MDGs have to be achieved by 2015, a target that some economists believe is out of reach. After all, it is only 10 years away.

The credibility of the entire development community is at stake as never before, says World Bank President, James Wolfensohn in introducing the second annual Global Monitoring Report, MDGs: From Consensus to Momentum'.

The onus is clearly on the rich countries to deliver on the promises they have made in terms of aid, trade and debt relief. Many developed countries are in a position to give more aid to deserving developing countries. Meeting the MDGs will require at least a doubling of the amount of official development assistance (ODA) reaching the poorest countries.

Trade issues between the two blocs should also be addressed without delay - opening up the markets of developed countries to products from poor countries will be a good start. Withdrawing protectionist measures and curtailing subsidies to farmers in their own countries are also cited as other progressive actions that could be followed by developed countries. Positive signs are already emerging - developing countries saw their share in world merchandise trade rise sharply in 2004 to 31 per cent, the highest since 1950. This trend would hopefully continue.

Debt relief has been granted to many tsunami-hit countries including Sri lanka, but more developing countries should be covered by such a policy in the long term.

But nothing is possible without a proper aid utilisation framework or mechanism in the poorer countries. These countries need to aim higher and do better in terms of their own policies and governance to make more effective use of aid. Sri Lanka, for example, has a very low of aid utilisation, which must be increased substantially to make the maximum use of aid. This is especially important in the context of aid chanelled for reconstruction after the tsunami.

Heads of State and Government will review the progress towards the MDGs at the UN Summit in September this year. Donors are being urged to use this occasion to raise their commitments and signal that swift support for the MDGs is forthcoming. Such concerted action will be essential to expedite poverty alleviation around the world.