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In September 1999, following an initiative by the G7 leaders, the World Bank (WB) and the International Monetary Fund (IMF) initiated the Poverty Reduction Strategy Paper process, which represented a new approach to assisting developing countries, especially those burdened by debt. This Strategy articulates the national development plan of a country, by defining achievable goals for poverty reduction, integrating social, macroeconomic and structural elements, and identifying measures for evaluating progress made to achieving agreed objectives. These strategies are to be country-owned and are based on a consultation process involving the poor and other key stakeholders in society.
...Montenegro decided to define its poverty reduction strategy, following proposals made by international financial institutions. The preparatory work on strategy development started in May 2002. The Government of Montenegro adopted the Interim Poverty Reduction Strategy on lgth July. This document was approved by the WB and IMF boards following a joint assessment process, on 22 July 2002.

A POVERTY PROFILE FOR MONTENEGRO
1. Complex causes of poverty - The fall in living standards and the rise in poverty in Montenegro over the last decade is primarily a consequence of a significant drop in economic activity. This in turn, was caused by numerous political and economic crises, wars in the region and the international isolation of the country. The most evident indication of the recession was the drop in production levels; GDP in 2002 was merely 63% of the level attained in 1989. As a result, unemployment rose by 50%, employment fell by 30%, and deterioration of the overall relations between export and import. Between 1990 and 2002, imports have been nearly doubled, and exports reduced by 65%. Depressed economic conditions, the destructive impact of the inflation (and hyperinflation), and
impact of economic sanctions, all helped contribute to the creation of a unique ))survival strategy((, embodied in a large informal sector (over 30%), which further weakened institutions and the financial power of the state in the field of social policy. Economic recovery and revitalization of the system show important indicators of progress in 2003, even though the growth dynamic is still unsatisfactory (See chapter 3, Box on economic indicators for 2003) and many citizens of Montenegro, who are located under or around the poverty line, are affected.