Since 1999, all concessional lending by the International Monetary Fund (IMF) must be targeted at poverty reduction. The paper critically examines the design and implementation of the IMF's poverty reduction initiative by focusing on the operations of the Poverty Reduction and Growth Facility (PRGF). The data relating to the lending activity of the facility, coupled with an econometric explanation of the size of a PRGF arrangement in terms of key macro-economic variables, reveal some surprises. Not only does the lending activity of the new facility not appear to be much different - in frequency, size or total lending - than that under the Structural Adjustment Facility or Enhanced Structural Adjustment Facility (SAF/ESAF), but the average lending to individual countries over the period 2000-2004 is also inversely related to the human poverty index. At a time when IMF is quickly losing its traditional clientele, such findings raise doubts about the Fund's efficacy in administering development finance.

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